Wireless Carriers Cutting Churn Rates: Study

Fewer customers are jumping ship, an In-Stat study says, mostly because of vendors' improved billing accuracy, the attitude of customer-service staff, and providing understandable bills. Challenges remain, though.

Antone Gonsalves, Contributor

November 30, 2005

2 Min Read

Customer retention rates are improving among wireless carriers, due largely to improvements in customer service over the last year, a research firm said Wednesday.

Strength was shown in billing accuracy, the attitude of customer-service staff and providing understandable bills, In-Stat said. The weaknesses, however, were found in long hold times, first-call resolution of problems, and the quality of support at the point of purchase.

Nevertheless, the average churn rate for the major U.S. carriers, which is the proportion of subscribers leaving a carrier in a year, has improved, dropping to 1.96 percent this year from 2.16 percent last year, a reduction of 11 percent, In-Stat said. In 2002, the average was 2.87 percent.

"Carriers are paying attention to customer service and it's making a difference," In-Stat analyst David Chamberlain said.

Cingular Wireless dropped its churn rate by 23 percent this year from last year, the highest reduction among the carriers, the researcher said. Sprint, which merged this year with Nextel, had the lowest reduction at 4 percent.

"There seems to be a parallel between satisfaction with the customer-service experience and reduction in churn rate," Chamberlain said. "People who are happy with their customer care are less likely to churn."

Out of a list of 11 elements related to customer care, 41 percent of the 1,100 wireless subscribers interviewed by In-Stat said understandable bills were strengths of their carriers, followed by 29 percent who chose the attitude of customer-service staff and 28.1 percent who picked billing accuracy.

The top three weaknesses were long hold times, chosen by 33.6 percent of the respondents; first-call resolution, 30 percent; and quality of support at the point of purchase, 24 percent.

About one in eight wireless customers considered his or her wireless carrier's customer service "excellent." Among individual carriers, however, results ranged from as low as seven percent to a high of almost 21 percent.

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