Consumer buying decisions still based on price – Nokia

A racehorse and jockey in a horse raceResearch from Nokia has highlighted consumer buying decisions for smartphones and post-paid contracts are still based on financial drivers as opposed to value add propositions, reports

With the worldwide number of smartphone and total number of mobile phone users estimated to exceed 2.6 billion and 5 billion respectively by 2019, the race is now on for operators to capture the biggest share of this lucrative market. Nokia’s research addressed a number of factors surround churn rate and customer acquisition, as well as wider trends, though concerns could be raised on the financial drivers for purchasing decisions placing operators in a similar arena to utilities companies.

Efforts in recent years by the operators have been to shift the focus of the consumer away from price, and move purchasing decisions towards value and performance. T-Mobile US announced a further prong to its ‘Un-carrier’ strategy this week, as it will reward customers with stock, seemingly for nothing in return in the first instance, though additional shares can be acquired by referring new customers to the brand. There have been similar efforts from operators around the world, though the statistics do not suggest there has been a significant impact.

In comparison between 2014 and 2016, the number of respondents who said their attitudes on retention were influenced by cost and billing was still the highest factor, but did drop from 45% to 40%. In terms of the reasons for choosing a new operator, 45% stated this would be based on price, with value adds, mobile technology and choice of devices, only accounting for 17%, 14% and 11% respectively. The quality of a network is also a concern, though the drivers behind choosing a new or staying with an operator are still predominantly price driven.

While price is still the number one objective for customers, the statistics do highlight value added services are having more of an impact on customer retention than acquisition. In terms of definitions, core operator offerings, such as SMS, data and minutes were not included in the research, however value added services increased the likelihood in a customer staying with an operator by 11%, the perception of a network’s quality was up 55% and the number of customers that used more than one gigabyte of data per month was also up 15%.

While operators are generally perceived as trying to avoid competing for new customers solely on price, the research does seem to indicate this would be the most effective route. While retention can seemingly be influenced by value adds, a utility model may be difficult to avoid for customer acquisition.

“We can see the marketing battles to acquire mobile subscribers are fierce,” said Bhaskar Gorti, Applications & Analytics president at Nokia. “What we don’t see as well is the work operators do every day to retain customers. Our study shows how important that work is – and also how challenging it is as customers, attached to their phones, demand higher levels of service.”

In line with industry expectations, 4G usage is on the increase with 38% of new subscribers over the last 12 months choosing 4G networks. The uptake is mainly witnessed in the mature markets, Japan and US are showing the highest levels of adoption, though respondents of the survey highlighted there still are barriers to adoption. For those who are not using 4G currently, a device which doesn’t support 4G or the price being too high were the main reasons.