Every year since 2003, marketing consultancy Aura Corporation has interviewed UK mobile phone owners for the Mobile Industry Customer Satisfaction (MICS) survey. This years poll, carried out between November 2006 and February 2007 on a sample base of 3,049, has found out what punters think about the products they use and the service they get and where they think improvements could be made.
At this years Mobile News Awards, O2 took the gong for Customer Service Mystery Caller. The network also scored first place in the MICS survey. Second place in the survey up one from last years poll and elbowing 2006 runner-up Virgin Mobile into the third slot went to an O2 joint-venture, MVNO Tesco Mobile. In addition, Tesco Mobile was also commended at the Mobile News Awards, this time in the straight Customer Service category.
There was no change at the bottom, with 3 propping up the table this year, as it did last.
The Mobile News Awards and MICS were as one in the handset manufacturer stakes, too. Samsung picked up the gong on the night and won out in the survey over Sony Ericsson and LG, maintaining the top spot from 2006.
LGs performance was particularly impressive, moving up from a lowly seventh in 2006 to third this year, some way in front of fourth-placed Nokia. The awards saw commendations for both Nokia and Sony Ericsson, while LG was a finalist alongside HTC and Motorola.
Failing to impress those surveyed, in last place this year from fifth place last, was Siemens.
Whereas this years Mobile News Awards gave the 2007 retail crown to The Carphone Warehouse, MICS bestowed it on O2 for the second year in a row. Sitting at fifth place in the survey, but nevertheless first among the major independents, Carphone dropped almost a whole percentage point this year compared with last.
The biggest winner was T-Mobile, whose retail performance saw it shoot from fifth last year to almost snatch victory just 0.3 per cent separated first and second.
Networks and retailers
Aura senior account manager Roberto Battistoni has been digging behind the headline results. He explains what the small print means for the industrys big players, starting with the networks and retailers.
O2 provides the benchmark both in terms of retail and customer service, says Battistoni. It has put the basics before the technology. It was open about problems with 3G and lack of demand for mobile TV, and was last to market with a broadband offering.
The break with Phones 4U, the purchase and integration of The Link stores and a programme of shop refurbishment indicates the network is still 100 per cent behind its strategy of focusing on branded stores.
He adds: The joint-venture with Tesco Mobile has been very successful customers are great advocates of the brand and rarely give it a poor rating.
Battistoni regards Virgin Mobiles performance as successful, especially in light of the assimilation of the NTL business and the groups rebranding as Virgin Media.
Given the activity surrounding the creation of the Virgin Media brand, Virgin Mobile has done well, he says.
However, it is having to work hard to protect its business, which is coming under attack from competitors branded retail outlets and new entries in the prepay space.
Virgin Mobile also faces the challenge of having to deliver a Virgin experience across an extremely diverse channel, made up of Virgin stores, major independents and Comet, he points out. It needs to improve its mobile TV offering and look at the phones on offer the Lobster range is particularly dated, with only around 10,000 changing hands.
In Battistonis opinion, the Virgin Media brand, in its infancy, faces an uphill struggle to puts its broadband and TV on the same footing as its mobile venture. At the same time, faced with its well-publicised problems, the group must make sure the impetus behind Virgin Mobile is not allowed to fade, he says.
Despite its size and long history, or perhaps because of them, Vodafone is considered to be a follower more than a leader. The companys focus seems to be driven by strategic initiatives and the development of services outside western Europe, where competition is very fierce.
Battistoni explains: At home, we saw very little activity and standing still in the mobile industry is the worst thing you can do. Even though it has not let them down, Vodafone has neither wowed or wooed its customers, and T-Mobile has overtaken it on the high street.
Vodafone did, however, have a massive impact on the channel, triggering a widespread review of distribution strategy when it pulled away from Carphone Warehouse.
Putting all its eggs in the Phones 4U basket was questionable, adds Battistoni. The Phones 4U retail experience does not compare favourably with that delivered by Carphone Warehouse.
Orange faces similar difficulties to Vodafone, says Battistoni. Another network thats lost the sparkle of the old days, he sums up. We see it following, rather than leading, as both an operator and a retailer.
Auras MICS survey found that, despite its purchase of 47 shops from The Link and continued store expansion, Orange has issues in store with an aging customer base.
Its staff and the range it offers are below par, says Battistoni, who notes that a new retail management team brought in from the fast-moving consumer goods sector is attempting to turn traditional stores into so-called entertainment centres.
New staff incentive schemes are proving only partially successful, as sales are in the doldrums and customer satisfaction is either static or in decline, he adds. As a network, Orange lost a place to Vodafone, with value for money and suitability of tariffs being cited as its greatest weakness.
T-Mobile, on the other hand, is showing real signs of life at least in terms of its retail experience on the high street. But its customer service was still found to be lacking.
Where T-Mobile has been successful in its retail approach, it has been less so in delivering customer satisfaction as a network, says Battistoni.
We know T-Mobile has been looking at how its retail estate is performing, because our field force came across them on several occasions.
T-Mobile scores highly in-store, with good staff, good deals, attractive stores and a lot of hardware being demonstrated. On the network side of things, there is some evidence T-Mobile is improving, but reception is still an issue.
Both O2 and Orange have benefited from a good customer loyalty scheme perhaps its time T-Mobile took a look at introducing one, he suggests.
Overall, across its network and retail operations, T-Mobile is second only to O2.
The Carphone Warehouse
Carphone Warehouse, more than other retailers, has experienced a tough year.
Its been a very difficult, yet exciting, year for Carphone, says Battistoni.
The chain has been extending its reach into media and content, while competing with fixed and mobile operators.
It had a Christmas trading period to be proud of, with growth of almost 20 per cent. And, crucially, over the same period, customer satisfaction only showed a slight dip, he says.
Carphone Warehouse has taken risks and is still taking them. The relaunch of TalkTalk saw staff struggling to cope with demand, and then complaints. Selling AOL in store may also prove a challenge. So might the proposed increase in retail footprint and the upscaling of selected stores.
Battistoni reckons Vodafones exit from Carphone, and the wider trend for networks to pull rank on retailers, has been the most defining moment in Carphones year.
The single biggest factor affecting Carphone was the seismic shift in the balance of power from the retailers to the operators. It saw Vodafone pulling its contract business and, as a result, renegotiation with other networks. At the same time, Orange demanded its broadband offering be sold alongside TalkTalk, and T-Mobile and Virgin won more distribution, explains Battistoni.
3, yet again, propped up the leader board and the reasons for its poor showing were numerous and damning.
Last year, despite a poor performance in the survey, we predicted growth. Weve seen growth. And we also see that 3 is still, by a considerable margin, the worst performer. Poor reception, a bad helpline experience and an inadequate range dont do the network any favours.
Expanding the retail estate and the appointment of a strong retail chief and marketing director will guarantee more control over connection quality and should see churn and ARPU figures continuing to head in the right direction, adds Battistoni.
However, at the same time, the integration of The Link stores will prove a challenge.
Battistoni adds that Auras research points to the fact 3 desperately needs to overcome the preconceptions surrounding its customer service, reception and range, just as much as it needs to take action about the same issues.
As far as customer satisfaction with handsets goes, the latest world rankings for handset sales by manufacturer, from October 2006, should be borne in mind when considering the latest MICS results.
According to Strategy Analytics, Nokia still leads by a considerable margin with 35 per cent of global market share, followed by Motorola (21 per cent), Samsung (12 per cent) and Sony Ericsson (eight per cent). But if customer satisfaction is a precursor to sales growth, handset scores in the Aura survey should set alarm bells ringing in boardrooms from Finland to the US.
Samsung has had another very successful year as far as awards and survey results go.
Samsung has had huge success with its slider and Ultra ranges, says Battisoni. It has expanded its market reach by adopting a variety of form factors including slider, clamshell and candy bar.
But it has challengers, he warns. It cant afford to be complacent, with Sony Ericsson snapping at its heels and LG having come from nothing with a significant challenge.
Sony Ericsson is getting close to Samsung, which must cause Samsung Mobile UK general manager Mark Mitchinson some concern, given that the two manufacturers share a very similar customer base.
Samsung prices are high, but networks can take solace in the fact Mitchinson promises his product drives the highest ARPUs in the business, notes Battistoni.
Sony Ericsson, many experts tip for the top this year in ceremonies and surveys, had a great year in the UK market, thanks largely to its high-end devices.
Battistoni sums up: It had star-quality handsets, a double-digit sales increase and an improved relationship with the trade. Outselling Nokia over Christmas, it is now fighting for the top spot with Nokia on contract sales.
Excellent camera spec and music player facilities are key to both Sony Ericsson and Samsungs success the two are in a different league at the moment.
He adds: The only clouds on the horizon are that Sony Ericsson does not appear to benefit from the same level of ad spend that several of its major competitors have access to. In addition, the trade may be cautious after having been let down over delivery dates during 2006.
Battistoni calls LG the surprise package of the 2007 survey. LG scored well on all counts, except for reliability.
LG built a UK presence thanks to its exclusive deal with 3, he says. It benefited greatly from the rollout of 3G and became, according to LG, the best-selling 3G phone manufacturer in Europe during 2005/6, with a 25 per cent market share.
Battistoni argues that a change of channel strategy now sees the manufacturer presenting the market with a range of fully featured, attractive phones as it goes to market on its own terms under the stewardship of a new senior management team.
Nokia, the monster manufacturer in terms of market share, suffered again this year in the survey.
Though still an immensely strong brand both in the UK and globally, Nokia does not appear to have the same degree of customer focus that its competitors have, says Battistoni.
At Aura, we track a boatload of metrics that tell us Nokia is a household name. A high proportion of customers have been with the brand a long time, a high proportion of people would choose Nokia if they were to switch from their brand and a high number of Nokia customers are likely to re-purchase.
However, Nokia does not lead in any area of customer satisfaction, which means it is no longer setting the benchmark. And at the same time, Nokia has seen rivals raising their game. The N73 in particular suffered at the hands of Sony Ericsson.
Worse, Nokias customers are unlikely to recommend the manufacturer to family, friends and colleagues. Others do much better for customer advocacy than Nokia. Advocacy levels for newcomers to LG, for instance, are higher than those enjoyed by Nokia.
Battistoni goes on: Its true Nokia customers are more likely to stay Nokia, but this is probably because they have never tried any other manufacturer.
The key problem for Nokia, highlighted by our survey, is the difficulty Nokia is having attracting new customers. I understand Nokia is currently looking for a sales director who will be tasked with delivering more customer focus.
Sagem has had a place in the sun for a few years, reckons Battistoni, but has now slipped. This is almost entirely due to customers demanding more features, rather than putting ease of use or reliability at the top of their wish list.
This is a warning for all manufacturers with an emphasis on the prepay market. Customers are saying they want the same feature set as contract customers enjoy, he explains.
The survey provides evidence that Sagem has failed to listen to customers and has let several down. It must address this problem, especially as arch-rival Alcatel will be going on the offensive in the coming year.
Still, it is something that a tier-two manufacturer such as Sagem can outgun Motorola, the worlds number two for market share, in the customer satisfaction stakes.
In addition to its well-publicised financial problems, Motorola is failing in the satisfaction stakes down a massive five per cent on last year.
Motorola has been remarkably unsuccessful at integrating features such as MP3 players and cameras into its phones, relying for far too long on looks alone, says Battistoni.
Also, it has failed to build on the success of the V3 RAZR because the customer base is demanding function over form.
We hear future launches centre around new colour and material variants all well and good, as long as the feature set gets a facelift at the same time. And if problems with its design philosophy arent enough to worry about, theres evidence of a significant decline in customer satisfaction in several other key areas.
After being abandoned by Ben-Q in September 2006, Siemens market share in the UK dropped to just three per cent. It now survives as a prepay manufacturer only. It has not featured among the top 20 handsets for a while, says Battistoni.
According to Battistoni, many of the key issues currently facing the mobile communications market are due to the accelerated change of the distribution model and the resultant rationalisation of the supply chain.
This has seen networks forming strategic and exclusive relationships with major independents, with power shifting from the retailers to the networks.
Distributors, too, have been dropped as the race for better quality connections takes precedence. Through their stores, the networks are increasing the pressure on independents, with 3, O2, Orange, Virgin and Tesco all planning a dramatic increase of their retail estate.
At the same time, network stores are changing emphasis from traditional mobile retailer to entertainment experience destination.
Non-specialist stores are also crowding in on the act, with Asda due to launch in April and Tesco already boasting in excess of a million customers.
Networks continue to attack churn and promote loyalty by going direct and demanding a quid pro quo by way of longer contracts.
They are desperately trying to ride the wave of social networking by offering customers the opportunity to define content, with varying degrees of success. As a result, the percentage of customers who would recommend their network has increased, as has the percentage that would definitely buy again from their chosen network.
The relentless march of technology is taxing manufacturers, all of whom are busy playing catch-up. Cameras are becoming more powerful and competent and internal memory is being expanded to rival the iPod. Internet and email accessibility is also being improved.
Mobile TV, launched with great fanfare during the World Cup, has hit the dual buffers of standards and cost, which has stopped it in its tracks at least for the time being.
One technology that has singularly failed to impress is video calling.
All manufacturers are working hard to find the right compromise between reliability, form and feature set. All of these are shown by the survey to be key satisfaction drivers.
The message that is borne out by our survey is manufactures cannot afford to neglect advances in technology, because customers demand and expect their phone to have them, concludes Battistoni.
It is too early for the recent industry changes to really show up in the MICS survey. But watch this space the results of the 2008 survey are only 365 days away.