Wireless Service
Wireless Handsets
Internet Service Providers
Local Voice
Long-Distance Voice
Communications
Services
THE WALKER LOYALTY REPORT
Executive Summary
Loyalty Report
May 2005
Table of Contents
Report Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Report Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Loyalty Report FAQs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Walker Loyalty Report Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
About Customer Loyalty Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
About Walker Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The recently issued Walker Loyalty Report for Communications Services takes a hard look at
five different sectors within the communications services industry:
wireless service,
wireless handsets,
Internet service providers (ISP),
local voice, and
long-distance voice.
By sector, this in-depth study assesses how well companies are earning the loyalty of their
enterprise customers. The report identifies the key drivers of customer loyalty, demonstrates
how loyalty impacts tangible business outcomes, and provides a wide variety of insightful
results about enterprise customers' attitudes, experiences, and perceptions.
1
Local Voice Executive Summary
1
2
3
4
5
Local voice lags all other sectors in earning loyalty
At more than 100 years old, local voice service may be the most mature sector in the industry,
but the results of the study suggest in all that time it hasn't learned much aboutwhat
drives customer loyalty. Only 34 percent of the sector's enterprise customers are trulyloyal,
making it the least successful sector in the industry in terms of earning customer loyalty.
The percentage of high-risk customers was 29 percent. High-risk customers have low
commitmentand do not intend to continue doing business with current providers.
Trapped customers—those who intend to keep buying but are likely to switch
providers if the right opportunity presents itself—account for 34 percent of those surveyed.
The figure represents the highest percentage of trapped customers within the industry.
Accessible customers—those who are loyal but might switch for reasons unrelated to
the provider's performance—account for 3 percent of those surveyed.
Highlights
Report Highlights
A
TTITUDE
BEHAVIOR
Accessible Truly Loyal
High Risk Trapped
3%
34%
29%34%
2
Local Voice Executive Summary
No Loyalty Leaders in local voice sector
Not one company within the sector scored high enough to qualify as a Loyalty Leader.
The results strongly suggest competitors may be focusing attention on other sectors as
local voice moves toward being a package element in a bundled suite of enterprise
communications service offerings. In an industry with an acronym for just about
everything, POTS—plainold telephone service—seems to be the aging relative the rest
of the family is eager to disown.
2005 LOYALTY LEADERS
Wireless
Wireless
Internet Service
Long-Distance
Service
Handsets
Providers
Voice
Local
Voice
None
Verizon
Wireless
Blackberry/RIM
Motorola
Nokia
Sony Ericsson
BellSouth
Time Warner
Verizon
BellSouth
Verizon
3
Local Voice Executive Summary
Report identifies loyalty drivers within the local voice sector
Quality, value, and cost are the key drivers of loyalty in terms of how enterprise customers
measure the performance of their local voice service providers. Truly loyal customers
expecttheir local voice service provider to be customer-focused; they look for strong
brands and industry leaders. The customer experiences impacting loyalty the most are
the quality of network service, the installation/activation process, and consulting/
professional services.
By improving in the areas that most impact customer loyalty, companies are able to
bolster customer retention, become more efficient in efforts to acquire new customers,
and realize other significant financial and performance benefits. The Walker Loyalty
Report for Communications Services allows managers to see how their firms are doing
against competitors and industry benchmarks on the very drivers with the biggest
loyalty payoffs.
Overall attitudes of customers
PERFORMANCE
0% 20% 40% 60% 80% 100%
61%
35%
78%
Denotes top drivers of
loyalty for Local Voice
Top-3 Box
% Excellent/Very Low
% Very Good/Low
% Moderate
†
KEY
Overall Quality
Value
Overall Cost †
4
Local Voice Executive Summary
Customers raise the bar for older, more mature technologies
The Walker Loyalty Report for Communications Services finds enterprise customers rate the
network quality of their local voice providers nearly the same as they rate the network
qualityof their wireless service providers. However, enterprise customers rate the overall
quality of their local voice companies lower than they rate the overall quality of wireless
service. In fact, they rate the overall quality of local voice service providers lowest of all
the service sectors.
These results suggest a dynamic of forgiveness coming into play making allowances for
some of the shortcomings of technologies that may misfire on some fronts but overall
deliver solutions perceived as superior and cutting edge. Enterprise customers certainly
benefit from the mobility, flexibility, productivity, and functionality wireless service
offers. In all these areas, the benefits of wireless over landline are easily perceived by
enterprise customers. The bar gets pushed higher for local voice services and lower for
wireless because the overall utility of wireless is so apparently better.
5
Local Voice Executive Summary
Loyalty drives financial performance
As in other industries, the report confirms loyalty absolutely correlates to hard, tangible
business outcomes in the communications services space.
Across the industry, Loyalty Leaders significantly outperform Loyalty Laggards. The
average revenue growth rate of Loyalty Leaders exceeds the comparable rate of Loyalty
Laggards by 20 percentage points and the three-year average operating margin of Loyalty
Leaders is 22 percentage points higher than the comparable financial result for Loyalty
Laggards. The percentage of change in stock price over five years is 34 percentagepoints
higher for Loyalty Leaders as compared to Loyalty Laggards.
Overview
Report Overview
"Companies experience loyalty in ways
that impact significantly on financial results
and other key performance metrics."
— Phil Bounsall
Executive Vice President
Walker Information
Loyalty Leaders outperform
Loyalty Laggards significantly
in a variety of financial and
business outcomes.
Financial Outcomes: Leaders vs. Laggards
Performance Difference
in percentage points
3-Year Average
Operating Margin
Average Annual
Revenue Growth
Average Annual
Growth in
Operating Income
5-Year Stock
Price
Performance
50%
40%
30%
20%
10%
0%
22%
20%
9%
34%
6
Local Voice Executive Summary
Satisfaction doesn't ensure loyalty
Not one sector in the communications services industry can claim even half of its enterprise
customers are truly loyal, yet all the sectors registered customer satisfaction scores of
at least 75 percent. In the local voice sector, 78 percent of the enterprise customers surveyed
are satisfied with their current providers, highlighting the significant gap between
customer satisfaction results and the comparative percentages of truly loyal customers.
As the report shows, satisfaction scores tend not to be predictive of future behavior.
The Walker Loyalty Report for Communications Services provides the information companies
need to move their customers beyond satisfaction to true loyalty.
"Satisfaction is a low hurdle…Measuring
satisfaction doesn't tell you much about a
customer's intentions and future behavior."
—
Jeff Marr
Vice President, Consulting Services
Walker Information
About the report
In compiling the data on the communications services
industry, Walker Information collected 7,062 brand
evaluations from 2,064 respondents, resulting in
readable base sizes (69 or more completed surveys)
for 21 companies—or, more broadly, 37 brands
representing these 21 companies.
Enterprise decision makers and influencers responsible
for purchasing of communicationsservices
and products were surveyed in March 2005. A
representative sample for United States and Canada
was recruited online by Survey Sampling, which
invited panelists to complete the survey on Walker
Information's Web site. Respondents evaluated suppliers
with which they had a current relationship.
Participant organizations varied in size from more
than 50 employees to more than 10,000 individuals.
Within the local voice sector, 1,079 brand evaluations
were collected.
SATISFACTION
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
78%
34%
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Local Voice Executive Summary
LOYALTY
What is a Walker Loyalty Report ?
The worldwide leader in customer loyalty management (CLM), Walker Information
publishes national loyalty reports to provide comparison and perspective. These reports
help companies understand how they compare to industry norms and deliver valuable
information to help develop mission-critical CLM programs aimed at improving customer
loyalty, retention, and profitability.
Why conduct a study on loyalty among various communications sectors?
As with any research program, it's important to continually update and monitor which
direction vendor-customer relationships are heading. Walker Information's research helps
identify key challenges and trends facing the communications services industry at the
brand level. In general, we conduct these national customer loyalty studies to introduce
the value of customer loyalty to firms within the focus industry, provide compelling
benchmark information for our clients, and leverage key findings publicly.
Who completed surveys of these communications services firms and manufacturers?
The Walker Loyalty Report for Communications Services surveyed decision makers and
influencers of business-to-business communications services and hardware purchases.
As part of a pre-recruited, representative panel from Survey Sampling, Inc., the
respondents offered feedback relevant to their attitudes and actual experiences with
communications service providersand manufacturers.
FAQs
Loyalty Report FAQs
Quick questions and answers about Walker Loyalty Reports
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Local Voice Executive Summary
What types of communications services companies are covered in this study?
Containing dozens of the industry's top service providers and manufacturers, The Walker
Loyalty Report for Communications Services focuses on the attitudes and experiences with
the top firms in five targeted sectors:
•
Wireless Service (both data and voice)
•
Wireless Handset Manufacturers
•
Internet Service Providers (ISP)
•
Local Voice
•
Long-Distance Voice
How can I learn more information about this Walker Loyalty Report ?
For more details about specific report packages, eligible communications services
firms, and study highlights, please contact Walker Information's business development
staff at 317.843.3939 or loyaltysolutions@walkerinfo.com . You also can visit
http://loyaltyreports.walkerinfo.com for more information.
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Local Voice Executive Summary
Content from The Walker Loyalty Report is available in several different formats and
vehicles. To learn more about these findings, better understand the impact of customer
loyalty, or evaluate your company's customer loyalty program, Walker Information makes
available four distinct loyalty offerings:
1. Custom Reports
Whether you just want to check out the sector scores, review your company's results,
builda competitive analysis, or create a cross-company report for your company, we can
build a report to meet your needs. Acustomized 2005 report can offer your company key
informationto help you improve your customer relationships, answering critical questions
such as:
• Which loyalty category does a company fall into—Loyalty Leader, Limbo, or Laggard?
• How does a company's satisfaction rating compare to its loyalty score?
• How loyal are a company's customers—truly loyal, accessible, trapped, or high risk?
• What matters most to a company's customers?
• What verbatim feedback or recommendations did customers share?
• How did customers rate firms based on their
products and services?
Portfolio
The Walker Loyalty
Report Portfolio
The Walker Loyalty Report for Communications
Servicesoffers standard industry reports as well
as customized brand-level reports.
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Local Voice Executive Summary
2. Loyalty Report Consulting
Learn what these results mean for your enterprise or industry,
or conduct an interactive exercise to learn more about the
impact of loyalty. Walker's loyalty consultants are available
for remote and onsite working sessions.
3. Web Content and Licensing
Walker Information can help you leverage your results by
developing scorecard-style designs of your results to be posted
on your Intranet or company's Web site. Licenses are also
available to tout results in all marketing strategies.
4. Strategic Assessment and Loyalty Roadmap
Receive a thorough analysis of how well your enterprise is gathering and using customer
feedback. Identifying strengths and areas for improvement helps shape a roadmap of
recommended actions.
Customer
Alignment
Toolkit
Sample
Scorecard
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Local Voice Executive Summary
Strategy
Processes
People
Communications
Technology Practices
Product/Service
Development
Various Organizational Components
Sources of
Customer
Intelligence
It's no secret. Today, companies need to hang on to every customer. In an increasingly
competitive market, keeping customers is challenging, but acquiring new business is
often even more difficult and costly. If your company measures and manages customer
loyalty, you have an edge.
Customer loyalty management goes beyond the typical annual customer survey and
traditional measurements of customer satisfaction to tracking the loyalty of customers.
At Walker Information, we're involved in gathering customer feedback to help companies
measure loyalty, understand what factors drive loyalty, and zero-in on the key actions
that can make the biggest difference in improving loyalty, retention, and profitability.
Ultimately, customer feedback and loyalty information helps companies attract new
customers, maintain the customers they have, grow customer relationships, and even
identify and save customers who show signs they may be departing. What's more,
when enterprises can take customer loyalty information and align it throughout the
enterprise, they can begin using the information to drive important strategic and
tactical decisions.
Loyalty
About Customer
Loyalty Management
12
Local Voice Executive Summary
Loyalty Insight and Background
3939 Priority Way South Drive
Indianapolis, Indiana 46240
Telephone: 1.800.334.3939
(International: +1.317.843.3939)
info@walkerinfo. com
www.walkerinfo.com
experience loyalty.
About Walker Information
Success in any enterprise depends on your ability to establish, maintain, build, and protect relationships,
especially with your customers. Yet in today's highly competitive business environment, it's difficult
to fully understand the dynamics of your customer relationships. That's where we help companies
experience loyalty.
Our diverse team of research consultants is committed to helping companies improve their business
performance. As the worldwide leader in customer loyalty management, Walker Information
understands the challenges and provides you with effective and innovative solutions to meet
them. Walker's signature customer loyalty programs combine technology applications with a
practical reporting system to give you the actionable information you need to better understand
your customers and gain a competitive advantage.
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