Mobile operators will need to improve the way they service current customers before they can attempt to serve business clients.
According to a recent survey of mobile phone users, 65 per cent were unhappy with the ongoing costs associated with mobile phones. More than one-third were dissatisfied with the level of service and poor network coverage.
Around 3,000 UK users were polled for a survey commissioned by Deloitte Consulting. Almost eight per cent of those who bought a mobile phone in the run-up to Christmas intend to ditch them just three months into their year-long contract.
If operators are unable to keep their traditional customers happy, how can they attempt to adequately serve the business clients it aims to attract with fixed-mobile convergence? asked Jim Sloane, head of the telecomms and media practice at Deloitte Consulting.
?Reducing the rate of churn [numbers of subscribers cancelling] and retaining customers is a major strategic issue for operators the world over, no more so than in the UK, where churn rates are among the highest,? said Sloane.
The UK is peculiar in that handsets are heavily subsidised but users pay a higher connection charge. In some cases customers pay around #40 for devices costing #400. Coupled with aggressive phone plans, customers are more likely to flit from one operator to another, increasing churn.
Sloane said UK operators and service providers should follow the Italian model where penetration is high but churn is low, by doubling the price of handsets and cutting air time costs by 30 per cent.
A spokesperson for the Federation of Communications Services, which represents the mobile phone sector, said the industry is already taking its first tentative steps away from subsidies by giving customers options of cheap handsets and high connection charges, or vice versa.
?Some dealers are offering this choice to customers now, but there still needs to be greater public awareness that handsets are subsidised,? said the spokesperson.
Customers upgrade handsets every 18 months but this will slow down in three years? time as manufacturers cease releasing new devices as often, which should help retain customers.
The FCS also suggests churn is the result of the sheer amount of choice on the market, which the spokesperson said is ultimately good for the customer and industry.
Sloane also believes operators are too hung up on attracting new subscribers and forgetting existing ones.
?Providing cheap handsets to attract new customers does not lead to long term, loyal users. UK operators need to change the way they attract customers and must become discriminating, targeting the most profitable customers and those most likely to remain loyal to the service,? said Sloane.
"Operators need tailor their offerings to meet individual customer needs, whether this is value added services or improved customer support," he added.
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