How much Americans spend, on average, each month for their wireless service?

Image by Peggy und Marco Lachmann-Anke from Pixabay

The American Customer Satisfaction Index (ACSI®) is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States.

 

Travelling to USA? Get Alertify SIM card.

 

The ACSI uses data from interviews with roughly 300,000 customers annually as inputs to an econometric model for analyzing customer satisfaction with more than 400 companies in 46 industries and 10 economic sectors, including various services of federal and local government agencies.

This year, ACSI introduces a new measure of customer spending for the wireless telephone service industry. Respondents are asked how much they spend each month for their wireless service. This information, in addition to the customer satisfaction and customer retention data, shows which
customer segments would have the greatest payoff if the customer experience is improved.

ACSI discovered that, at the industry level, more than 25% of customers fall in the $26-$50 spend range and 55% spend between $1 and $75 on their wireless bill each month. However, under 10% of respondents spend between $201 and $500 monthly, and just 1% spend more than $500 per month.

The Customer Value Segment Model makes it possible to distinguish customer groups based on how much each spends on wireless, along with differences in satisfaction and loyalty. The model then pinpoints the segments for which the financial return from investing in better customer satisfaction is the strongest.
For example, while nearly 70% of customers indicate a spending level between $1 and $100 on their wireless bill, these customers account for no more than 35% of revenue.

On the other hand, there are two groups that make up 18% of the customer base but spend $101-$150 and $250-$500, respectively.

Paradoxically, these two groups have lower customer satisfaction and are less
loyal to boot. In fact, these customer groups account for about 40% of the revenue lost to annual customer churn across the industry.

The data also identifies the leaders and laggards in ACSI and retention across the CSV groups. The “lower spend” segments – $1 to $75 – are more satisfied, more loyal, and have lower churn rates than almost all other groups, with only the very highest spending customers – the tiny proportion of those spending more than $500 each month – experiencing higher churn. For customers spending more than $76 per month but less than $500, ACSI scores and retention rates drop considerably.

 

The most valuable wireless customers

We then multiply the monthly annual per-customer spend by the number of customers in each CSV group to find the revenue and relative contribution to total revenue for each segment in the sample. If you’re familiar with the 80-20 rule, you won’t be surprised by the results.

The $1-$25 group accounts for nearly 15% of the total customers, yet only contribute 2% to overall revenue. Meanwhile, the $251-$500 group consists of under 5% of the respondents but contributes more than 17% to total revenue. Based on both its sample size and mean customer spend, the $101-$150 segment, which accounts for a little less than 14% of the total customers, contributes the most to the total annual revenue at a little under 19%.

In measuring customer satisfaction for US mobile network operators T-mobile, US cellular, Verizon, Sprint and AT&T) this is what matter most:

Mobile network operators are the lowest-scoring category in the wireless telephone service industry, with an ACSI score of 73.

Customer satisfaction with full-service mobile virtual network operators is 77, significantly higher than the rating for mobile network operators. Competition from new alternatives like Comcast’s Xfinity Mobile and Charter’s Spectrum Mobile is putting pressure on traditional carriers to improve service.

With an ACSI score of 81, customer satisfaction with value mobile virtual network operators is the highest among the wireless categories. Consumer Cellular leads the pack at 85 not only among value MVNOs, but across all carriers.

You might also like

Leave A Reply