Creating Customer Experiences That Create Trust
In a maturing market, mobile service providers are challenged to achieve organic growth. Looking at the problem through the lens of customers’ trust provides new insights and presents a new strategic solution.
The years of rapid growth in the mobile telecommunications market in the United States are history. Mobile penetration, measured by the number of mobile phone subscribers per 100 inhabitants, crossed the 100 percent mark in the third quarter of 2011 and is forecast to be stable at about 104 percent through 2015.1 The compound annual growth rate of consumption volume is anticipated to decline to 2.3 percent through 2015.2
In this slow-growth environment, retaining existing customers and acquiring additional customers from the competition are paramount objectives. Unfortunately, mobile service providers are generally not doing well at the former and are paying a steep price to achieve the latter. Annual churn rates among the largest mobile service providers range from 16.4 percent to 52.6 percent,3 and the average cost to acquire a new customer is $350 to $400.4 Fighting the battle through clever advertising and promotions, discount pricing, and new handset introductions is an activity in which all mobile service providers are engaged—and, as a consequence, the effectiveness of these activities is diluted and the impact is transitory. There must be something more that can be done to win customer commitment and loyalty and to secure customer advocacy.
Based on research conducted by Peppers & Rogers Group,5 there is a new path to ponder, namely, concentrating on building a foundation of customer trust, by identifying and improving upon those experiences that are most salient in enhancing that trust.