Brand and brand name is the key factor for customer when choosing a wireless service. What’s interesting in the J.D. Power and Associates 2006 Wireless Retail Sales Satisfaction StudySM whose Volume 2 was released today – is that the customers are increasingly influenced by the handset when selecting a wireless service.
While the summed importance of branding (of the carrier and the phone) in purchasing decision seems to remain constant at a total of 59% it is worth noticing that 19 percent of customers cite the type or brand of cell phone as a key factor during the initial process of selecting a wireless service, up from 11 percent in 2004. While the brand of wireless provider is still the most popular reason influencing the initial selection process, it has decreased significantly in importance, down 8 percentage points from 2004 to 40 percent in 2006.
Other key factors that influence the initial selection process are price/promotion (29%) and retail location (12%).
While this strategy is adopted due to high competition in the field, I honestly don’t find it sustainable on the long term because promoting the cell phone instead of the service plan and the carrier that provides that service may lead to sales growth in the short term, but it can potentially have a negative long term impact with higher churn rates.
The study actually shows this. As such, among customers who are most influenced by the cell phone brand, the likelihood of switching carriers in the next 12-month period is 60 percent higher than among customers who cite the brand of the wireless provider as their key factor in the selection process.
On the other hand study shows that among major wireless carrier-owned retail stores, T-Mobile ranks highest in customer satisfaction for a fourth consecutive reporting period. T-Mobile receives particularly high ratings in all four factors that determine overall satisfaction. T-Mobile is followed in the rankings by Verizon Wireless and Alltel, respectively.
Volume 2 of the 2006 Wireless Retail Sales Satisfaction Study is based on experiences reported by 7,530 wireless users who completed a retail sales transaction within six months prior to being surveyed. The results are from the two most recent reporting waves, which were conducted in April and July 2006. More about the study here.