Brand Love - Why One May Be the Loneliest Number
Posted April 25, 2013
Customer loyalty in the telecommunications world is built on varied and complex relationships which have driven some of the world’s best communications and products.
Customer loyalty in the telecommunications world is built on varied and complex relationships which have driven some of the world’s best communications and products:
For wireless providers that are at or near saturation, customer loyalty is a marketing challenge that has led to some very compelling campaigns (this ad has always been my favorite).
For handset manufacturers where the product lifecycle can be incredibly short, consumers’ insatiable demand for new and improved technology has driven designers to great lengths (my GS III might be the most beautiful and functionally impressive piece of technology I have ever owned).
Loyalty to telecoms is further complicated by multiple brands and ever-changing products and packages. If you love your AT&T iPhone, is your loyalty to AT&T or to Apple/iPhone? To look more deeply into some of these issues, we recently launched a benchmark Telecoms Loyalty Study. Our goal was to understand current brand loyalty in the telecommunications space and what drives it.
As we discovered, the numbers are only half the story—the issues that drive loyalty are equally fascinating.
Where Does Loyalty Predominate?
In general, loyalty still rests mainly with the wireless carriers, with almost three-quarters of consumers indicating their intention to remain loyal (due to coverage, customer service, plan and more).
Loyalty varies greatly by brand and by “brands in combination.” For example, the Verizon brand is just as powerful a driver of loyalty in the wireless space, if not more so, than Apple. Using our proprietary methodology, the study revealed:
The loyalty score for Verizon customers who could have any phone is 83%.
The loyalty score for Apple users who could be on any network is 82%.
That is, 83% and 82% of current customers will likely remain with Verizon and Apple respectively—a dead heat. However, when we looked at the combination of Verizon PLUS Apple (i.e. consumers on the Verizon network who have an iPhone), Verizon’s loyalty score stays the same while Apple’s increases by 6%. So when you isolate iPhone users among Verizon customers, it does not appear to matter (loyalty remains just as high). But, isolate Verizon customers within all iPhone users and you have a group of people who are the most loyal in the industry. By adding Verizon into the mix for iPhone users, loyalty increases because of the positive impact of Verizon’s brand.
Of course, the beauty of survey research is that we can uncover the why behind the numbers—Apple users love the features and ease of use of their iPhone while Verizon loyalists love their network quality (there are other reasons, of course, but loyal customers mention these most).
Crazy Little Thing Called Love
To understand what motivates brand loyalty, here are some of the comments we heard:
“I love my iPhone. It is easy to use and has absolutely everything that I need.”
“I feel my Apple iPhone offers all the features I am looking for in a device. Especially the camera’s features and clarity. Plus the variety of apps gives me options for my needs.”
“I love everything about the iPhone. The apps are amazing, and it will do anything I ever want or need.”
“I am all around pleased with the service on my phone. I have had other service providers and Verizon has so far given me the best service and the best coverage. Everywhere I have gone, all the different states, etc., Verizon always works. I don't drop calls.”
“I have been with Verizon for 15-plus years and have had no problems. Why change?”
Working and Winning Together
Our Telecoms Loyalty Study confirmed that there is a very interesting dynamic at play for “brands in combination.” Brands want to be associated with other leading brands or, at least, not associated with poorly-perceived brands. Yet a brand still has to be differentiated enough to generate a premium. Being perceived as a “necessary part of a great combination” seems to be important for all of the players.
Needless to say, there are brand combinations that push up or pull down the loyalty of certain brands in isolation. For example, both T-Mobile and Samsung (particularly Samsung) enjoy a nice bump from their association. It should be noted similar perceptions do not exist with the AT&T/Samsung combination.
Of course, today Samsung does not overtly compete with the iPhone on the T-Mobile network (that will change soon when T-Mobile begins selling Apple products). That dynamic will be fascinating to track when we conduct future waves of this survey.
Hit the Road Jack
Disloyal consumers do not mince words and indicate that they will churn (though we all know consumers don’t always do exactly what they say!):
“I am tired of the poor service area. I am unable to receive texts even from other people on <brand>. Also, my texts are always messed up. They are never in the correct order, and, at times, current texts contain sentences from previous texts making it very confusing.”
“Sick of <brand> poor customer service, high rates and contracts.”
“I have had several <brand> phones before, and I notice that after 1-2 years of use they become glitchy and start having problems. A friend of mine has a <competitor brand> smartphone, and I love the way it works and the hardware that comes with it.”
“<Brand> phones don't seem to have the fluidity and speed of <competitive brand>. The <competitive brand> is sleeker, easier to use and has more functionality.”
A Glimpse into the Future
These results provide a glimpse into the future of the telecoms industry. The evolving brand combinations will continue to have a strong influence on consumer perceptions as new devices, plans and device/OS combos are all tested in the consumer market. Individual brands can only control so much of the perceptions that exist about them. The “working together” mantra is a strong one that consumers demand. Future waves of this study will track the various successes and failures.
Our study generated this type of analysis for many brands in the industry. Using a simulator designed by our Marketing and Data Sciences team, we can see which brands in isolation and which brands in combination generate the greatest loyalty. The research also suggested which brands can exploit certain strong relationships and which brands improve perceptions of others.
If you’d like to see the full report and simulator in action, contact:
Senior Vice President, Communications Division
About the Study
Market Strategies International interviewed a national sample of 989 consumers ages 18 and older between February 10-17, 2013. Respondents were recruited from an opt-in online panel of US adults and were interviewed online. Respondents were screened to meet certain criteria, like being a current wireless user. Due to its opt-in nature, this online panel (like most others) does not yield a random probability sample of the target population. As such, it is not possible to compute a margin of error or to statistically quantify the accuracy of projections. Market Strategies will supply the exact wording of all survey questions upon request.