JD Power finds MVNOs are beating MNOs in customer satisfaction — Greenblatt

Industry Voices - Greenblatt

Perhaps not surprisingly, at a time when the price of a dozen eggs has surged 60% in just a few months, price sensitivity is influencing wireless customer behavior. Depending on how well carriers manage the service side of that customer migration, we may start to see some serious disruption among mobile carriers.

The phenomenon is most pronounced in the mobile virtual network operator (MVNO) space, occupied by carriers like Cricket and Metro by T-Mobile. Because these providers do not technically own their own network infrastructure, but rather purchase capacity from a third-party operator at wholesale prices, they tend to offer lower-cost plans to consumers. Within that group, a subset of so-called value MVNOs, like Consumer Cellular, TracFone and Straight Talk, offer even lower-priced plans.

Mass migration to lower priced plans

In both categories, customers are increasingly switching for lower prices. Among current MVNO customers, the proportion of wireless customers deciding to end their service with a previous carrier based primarily on price has grown to 58% in January 2023 from 43% in January 2021, according to J.D. Power data. Among value MVNOs, the number of price-switchers has grown to 68% in 2023 from 63% in 2021.

While that may sound like a golden opportunity for lower-cost carriers — and it could be — the MVNOs must get key components of the customer experience equation very right to convert this price-sensitivity into long-term customer value. Indeed, price-driven behaviors in the mobile space do not always result in long-term relationships. Roughly 10% of wireless customers who leave a carrier for price reasons end up leaving again the next year for an even lower-priced offer.

This is a phenomenon we see across virtually every industry in our work tracking customer experience at J.D. Power. Price shoppers tend to be the most volatile customer segment. Thus, while it is possible to woo new customers with the promise of a lower price, keeping those customers is all about service and customer perception of value.

Getting the customer experience formula right

That user experience can come in many forms. Network quality — including the number of problems users experience over the course of their experience with the carrier — communications with the carrier, billing and payments, pricing, customer service and purchase process experience are all vital components of the total customer experience. Thus, it’s not enough in the current marketplace to be miles better at any one thing. To build a winning wireless brand, carriers need to deliver consistently at every customer touch point.

This is where things get really interesting. Wireless providers as a group are all getting meaningfully better at the customer experience side of things, which is a high-visibility place where they can clearly demonstrate their unique value. In fact, after several tough years of dealing with staffing challenges and investing heavily in self-service digital customer support solutions, wireless providers are solving customer issues faster than ever.

Overall customer satisfaction with wireless customer care rose a significant 14 points (on a 1,000-point scale) this year, according to our data. That’s not all. The individual providers with the highest overall customer satisfaction scores in the study were all MVNOs: Consumer Cellular, Metro by T-Mobile and newcomer Mint Mobile.

Moments of truth

This sets up a potential game-changer moment in mobile. If carriers can seize on this moment and over-deliver on customer expectations for service and value, we could see big moves in the space. Among MVNOs in particular, we’ve already begun to see fast movers establish big brand recognition quickly. If they can deliver on those brand promises with high quality customer engagement and reliable service, they could start to take market share from the incumbents.

Ultimately, the decision to switch carriers — whether it is born out of price sensitivity, frustration or convenience — is a stressful moment for customers. Most of us go into the experience full of second guesses, even dread, wondering whether we’ll suddenly start dropping calls or experiencing erratic service. When carriers anticipate that stress and reset expectations by turning it into a delightful experience, they create a unique opportunity to build customer lifetime value.

Ian Greenblatt is managing director of the Technology, Media and Telecommunications Intelligence practice at J.D. Power. With in-depth industry expertise, Ian drives market strategy across the rapidly converging landscape, which encompasses the entire communication sector. You can reach him by email at [email protected] and follow him on Twitter at @GreenblattTMT.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not necessarily represent the opinions of FierceWireless.