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Cell Phone Churn Increasing

T-Mobile, Verizon Wireless Tie For Top Spot in J.D. Powers Survey

October 6, 2005

Wireless Satisfaction • Wireless Users Frown on Automated Customer Care • Wireless Satisfaction Slumps • Customer Churn Increasing, Study Warns • Cell Phone Users Unhappy, Survey Finds • Cell Phone Carriers Agree to Ground Rules in 32 States --- • More about Cell Phones ...

As wireless penetration among new users begins to slow and the competition to keep existing customers continues to accelerate, the likelihood of switching providers among those most dissatisfied with their recent retail purchasing experience has increased 46 percent from 2004, according to the J.D. Power and Associates 2005 Wireless Retail Sales Satisfaction Study.

The study finds that 20 percent of subscribers who are not satisfied with the overall retail purchase experience say they will "definitely" or "probably" switch current carriers within next 12-month period -- up from 13 percent in 2004.

In addition, dissatisfied customers are 25 percent less likely to visit the same carrier store again to purchase wireless services and 35 percent less likely to recommend the carrier service to family and friends in the future.

"With fewer new customers entering the market, the wireless industry is becoming fiercely competitive for retailers," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates.

"The retail stores of wireless carriers face strong competition in the areas of price and promotions from national electronic retail outlets such as Best Buy and Radio Shack, which offer wireless service. It’s imperative that wireless service providers concentrate on retention strategies, as the ability to expand the customer base becomes more difficult," Parsons added

The study, now in its second year, provides a detailed assessment of customers who had a wireless retail sales buying experience within the past six months. The study measures overall customer satisfaction performance of the major wireless carrier-branded stores based on four factors (listed in order of importance): sales staff (44%); price/promotion (28%); store display (14%); and store facility (14%).

T-Mobile and Verizon Wireless rank highest in a tie and are the only carriers to perform significantly above the industry average overall. Both receive particularly high ratings relative to the competition in the price/promotional dimension.

The study finds the following key retail wireless sales transaction patterns:

• The reported average wireless retail sales transaction takes approximately 70 minutes to complete from the time the customer enters the store to the time final paperwork is completed and the cell phone is received. This is an increase of more than 8 minutes from 2004.

• Retail satisfaction suffers among those customers who feel they were pressured during the sales process. The average overall satisfaction rating among those customers who report feeling no pressure is 98 index points, compared to 66 among those who felt pressured in some way -- a 48 percent difference.

The 2005 Wireless Retail Sales Satisfaction Study is based on experiences reported by 6,144 wireless users who completed a retail sales transaction within the past six months.

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