New report: app and video streaming experience determine customer loyalty
- New behavior with video apps is causing smartphone issues, despite improvement in networks. One third of South Korean smartphone users from the survey say they watch live streamed videos broadcasted by others.
- 50 percent of the smartphone users in South Korea face more than 11 issues at least weekly, those facing issues are 1.5 times as likely to switch.
- Net Promoter Scores (NPS) are no longer enough to gauge smartphone user loyalty.
In the business of mobile broadband, customer loyalty isn't what it appears to be. As smartphone users’ behavior changes, traditional measurements are no longer enough to determine whether customers prefer their operator, a new report from Ericsson ConsumerLab says.
For all the improvements in mobile networks since 2013, the number of smartphone users facing issues daily has not changed. 44 percent in South Korea say they face at least one issue daily. One key reason for this is new video streaming behavior worldwide: ranging from South Korea, where one-third of smartphone users watch live streamed videos broadcast by other users; to the US, where 14 percent have started to use live video streaming apps.
But while consumer behavior has changed, the widely-used customer loyalty measurements in the telecom industry have not. The report, “Experience shapes mobile customer loyalty,” shows that Net Promoter Scores (NPS) fails to determine users' preference for their mobile network operator, chiefly because it takes no account of the changing expectations of network performance as a result of new video streaming app behavior.
The report shows that globally smartphone users who face 11 or more issues per week are approximately twice as likely to think of switching operators. Alarmingly, 50 percent of the smartphone users in South Korea face more than 11 issues at least weekly, with video streaming glitches more common now.
Cathaya Xu, Head of ConsumerLab RNEA, says: “heavy users of new video-centric app features are more likely to face a high number of issues and therefore seem more willing to invest in improving the experience, compared to those who do not use these new features. 16 percent of smartphone users in South Korea would be willing to pay more for their data plan if their provider offered a guaranteed good experience on some of the key apps they use frequently.”
“Comparing different network connections, in South Korea, 4G users have better experience on network elements than 3G users. In particular, satisfaction index on time respond to content and data reliability for 4G users is as 1.8 times high as 3G users. For users who are willing to switch operator, 4G users are only half the number of 3G users.” says Cathaya.
The report offers six different loyalty profiles to quantify the different motives and preferences that smartphone users exhibit towards their operator. In many cases, consumers who say they would recommend their operator do so not because they prefer the operator, but because they cannot identify a better alternative, the report states.
The report found that the mobile broadband experience remains the principal driver of smartphone user loyalty to operators. However, it also emerges as a common source of dissatisfaction among 57percent in South Korea.
Smartphone users apply their own set of criteria to judge mobile broadband experience, based on how apps are performing – in particular whether video apps stream without interruption, or how fast users can upload content to share with their social networks. Millennial smartphone users (ages 18 to 24) overwhelmingly prefer to find out from operators how their favorite social media and video streaming apps perform on the network rather than the extent and reach of network coverage, the study shows.
“As new apps emerge and video usage behavior evolves, network performance will matter more than ever and will determine how loyal smartphone users will be to their operators,” says Jasmeet Singh Sethi, Senior Advisor with Ericsson ConsumerLab.
The views expressed in the survey are representative of 25 million in South Korea; in total 650 million smartphone users across 14 markets: Brazil, China, Germany, India, Indonesia, Ireland, Oman, Poland, Russia, Sweden, South Korea, Ukraine, the US, and the UK.
About the report
This study included both qualitative and quantitative research, as well as on-device measurements. A total of 30 smartphone users from South Korea, the US and the UK participated in in-depth, face-to-face interviews.
In February 2016, 1,000 smartphone users in 14 global markets participated in an online survey (except India, in which 2,000 users participated). A total of 15,000 iPhone and Android smartphone users aged between 18 and 69 took part in the survey across Brazil, China, Germany, India, Indonesia, Ireland, Oman, Poland, Russia, Sweden, South Korea, Ukraine, the US, and the UK. All smartphone users surveyed used apps over mobile broadband at least weekly.
The views expressed in the survey are representative of 650 million smartphone users across 14 markets.
On-device meter panels were used on 11,500 Android smartphones in South Korea and the US to record every interaction users had with their smartphones (data collected by Nielsen in October 2015).