Meeting customer expectations has always been critical for the success of any organization. For the telecom industry, this has become even more critical as the industry moves from customer acquisition to building loyalty. Though, loyalty is a notoriously difficult metric to measure yet it is essential for understanding consumers' reasons for choosing – or staying with – a particular operator. Network performance plays a crucial role in driving smartphone user loyalty towards operators. However, as apps continue to evolve and increasingly incorporate video, there's been a shift in both usage behavior and an increase in expectations, leading to changing consumer loyalty.
Raising User Expectations, Thanks to Evolving Video App Usage: Smartphone users in India are going beyond on-demand video streaming to live streaming. Ericsson ConsumerLab studied 2000 smartphone internet users across 8 metros to understand “Evolution of consumer loyalty”. It found around one in two smartphone users watch social videos including live streams on apps such as Facebook or similar video-centric apps at least weekly. Two in five who don’t, are interested in live video streaming apps. While, this evolving consumer behavior puts added pressure on the networks, more and more, users are coming to expect shorter loading and buffering times and they also expect their services to work irrespective of the location.
Only Net Promoter Scores are not Enough: The Ericsson ConsumerLab insight report also states that around one in five smartphone users who are promoters of their current operators, despite being satisfied and willing to recommend them, do not necessarily prefer them over other operators. Many businesses rely on the Net Promoter Score (NPS), a simple metric to gauge consumer satisfaction and loyalty, based on whether or not consumers would recommend them. NPS may be helpful at a high level but it tells only a small part of the story. When consumers consider using a brand’s services or products, they often compare the alternatives available. They may highly recommend one operator, but be equally as positive about many others as well. This underlines the need to understand consumer loyalty in the full competitive context.
Users have their own mental indices to judge connectivity experience: The Indian smartphone users are evolving. They have devised their own mental indices to judge connectivity, in fact, 4G users have different indices to judge connectivity experience compared with 3G users. As per the report, on average, four out of a total of 10 indices are being used to judge mobile broadband performance, compared to the global average of three. 36 percent of Indian smartphone users utilize five or more indices to judge connectivity experience. Millennials aged 18–24 perceive network performance by time taken for videos to load and buffering effects on video streaming apps, compared to 40–49 year olds who judge network performance by web page load speeds. Millennials use a greater number of indicators than other groups to build their perception of performance; 40 percent apply more than five mental indicators, compared to just 27 percent of users aged 40–49. Moreover, while 40 percent of 4G users use video loading and video buffering aspects while streaming as the index to judge network performance, nearly half (48 percent) of 3G users judge the time it takes to load a web page as the prime indictor for a positive connectivity experience. Almost half of smartphone users have ‘time taken to upload content on social media sites’ as the proxy to judge connectivity experience. These indicators vary by demographic and type of smartphone usage.
4G Driving Consumer Satisfaction: 4G usage behavior is moving towards more data-centric services. For instance, as per Ericsson report, while 46 percent of 3G users play games online daily, 68 percent of 4G users play online games on their smartphones every day. Some 81 percent of 4G users stream videos on a daily basis, compared to 70 percent of 3G users. In terms of navigation services, 59 percent of 4G users access these daily on their phones, but only 37 percent of 3G users do so. This could be attributed to the fact that 4G users are more satisfied with their network speeds. In fact, 4G users are, on average, 1.5 times more satisfied than 3G users.
Mobile broadband experience is currently the most important driver behind smartphone users’ loyalty to operators. In fact, mobile broadband experience is five times more effective in driving loyalty than offering and pricing. Past Ericsson ConsumerLab studies also indicate that network performance and value for money are correlated. This suggests that improving network quality also increases the perceived value for money – without actually lowering tariffs. However, it is important to note that a lack of customer defection does not necessarily indicate loyalty. While mobile broadband networks have improved with time, apps have also evolved incorporating new features such as video, which increases the demand on network performance. As new apps continue to emerge and usage behavior evolves, network performance will matter more than ever and will decide how loyal smartphone users will be towards their operators in the future.