Device satisfaction drops to lowest level just six months into a new mobile contract
The rapid pace of smartphone new releases can be damaging to mobile operator loyalty, according to a new UK study.
The lifespan of a flagship smartphone is now less than half that of the average two year mobile contract, leaving many contract customers locked to a device that may be superseded just months into their contract.
The result is a rapid fall in device satisfaction after just six months of ownership, which drops from 71% to just 53% of customers highly satisfied with their smartphone by the end of the first six months, stated the study from WDS, A Xerox Company.
According to the study, roughly 40% of total UK subscribers are a churn risk in the next 12 months.
'This is not a problem with smartphone innovation. Innovation is good. The problem is that lengthy mobile contracts and smartphone innovation are totally misaligned,' said Tim Deluca-Smith, vice president of marketing at WDS.
'The industry is asking customers to commit in excess of £1,000 over two years to use a product that will likely be superseded less than a year into the contract. It's little wonder that satisfaction starts to fall so quickly as they watch their device discounted [to make way for a replacement]often within months of launch,' added Deluca-Smith.
For mobile operators the study suggests a customer's repurchase intent is heavily influenced by device satisfaction. By the end of the first year, only 38% of customers could guarantee that they wouldn't switch operator at the end of their contract period. This was despite an overall improvement in network performance satisfaction over the same period, from 60% to 67%. 'What surprised us was the speed at which device satisfaction drops,' continued Deluca-Smith. 'As such a tangible component of the mobile operator contract, it's easy to see why the device is so influential in governing overall satisfaction; more so than even a positive network experience. Unfortunately, across most of the industry, the device is still bundled to multi-year service contracts, leaving millions of customers facing smartphone obsolescence within their contract period.'
Deluca-Smith concluded: 'Several operators around the world have recognised this problem and launched contracts that de-couple the smartphone from the service, making it easier to upgrade independently of the service contract. We feel that this data will make this shift almost inevitable across the wider industry.'