Cell-phone Loyalty in LatAm: Potential for Large Disruption, Given the Right Offer

PR61586

NUREMBERG, Germany, Sept. 1, 2015 /PRN=KYODO JBN/ --

     Across Latin American countries, only 20 percent or less of cell phone

users have switched their service provider in the last 12 months. But when

presented with various scenarios of improved offers, the percentage of people

who say they would switch rockets to between 35 and 59 percent.

    These are some of the findings from a recent GfK online survey of around

4,900 cell phone users covering Argentina, Brazil, Chile, Colombia, Mexico and

Peru.

    In the last 12 months, just 20 percent of cell phone users in Columbia have

changed their provider, followed by 19 percent in Brazil and Mexico, 17 percent

in Chile and Peru, and just nine percent in Argentina. But when GfK presented

the respondents with a number of scenarios of different improved packages, it

found that the percentage of 'loyal' users,  who would not switch in any of the

presented scenarios, is low (5 to 16 percent) - while the percentage of

'mercenaries', who would switch in any of the scenarios presented, ranged from

a third to over half.

    Peru has the highest percentage of 'mercenaries', standing at 59 percent,

followed by Colombia (53 percent), Brazil (52 percent) and Mexico (50 percent).

Even Chile (37 percent)  and Argentina (35 percent) have well over a third of

cell phone users saying they would switch provider in any one of the package

scenarios presented.

    Looking at the completely loyal users, who say they would not switch in any

of the package scenarios given, Chile comes out top, at 16 percent, followed by

Argentina at 10 percent, then Brazil and Colombia at five percent each, Peru at

four percent and finally Mexico at just three percent.

    It is also worth noting that 'number portability' - the ability to take

one's cell phone number with one when switching provider - has only recently

been introduced in Latin America. The expectation is that this will also

increase churn, having removed one of the major barriers to switching.

                 Argentina   Brazil   Chile    Colombia   Mexico    Peru       

     Have

     switched in

     last 12

     months           9%       19%      17%       20%        19%      17%

     Mercenaries:

     would switch

     in any of

     the

     scenarios

     presented       35%       52%      37%       53%        50%      59%

     Loyal: would

     not switch

     in any of

     the

     scenarios

     presented       10%        5%      16%        5%        3%       4%

     Sample: smart phone users in Ar, Br, Co, Mx and Pe; total market in Cl

    The study showed that the top two most attractive packages for consumers

were: their current plan at a better price with a phone included for free, or a

better plan at the same price, again with a phone included for free. Brazil

alone stood out in voting the most attractive package as being their current

plan at a lower price with the latest-technology phone included at a very low

price.

    Frans Janssen, chief operations officer for GfK's Consumer Choices research

in Latin America, comments, "Currently switching between cell phone providers

is low across the LatAm region, giving the impression that loyalty (or inertia)

is high. But this is not the case. Our findings show there is potential for

high levels of churn, given the right offer. To retain their existing users and

win users from competitors, service providers need to offer packages that

maximize profit for the user. The first providers who go in with improved

offers - backed by good quality service - are likely to make significant gains."

    About the study

    GfK interviewed a total of 4,911 people aged between 14 to 65 years old via

online surveys conducted in Argentina, Brazil, Chile, Colombia, Mexico and

Peru. Fieldwork was carried out in July 2015 and the data weighted according to

sample distribution of age, gender and region.

    For more information, please visit http://www.gfk.com or follow GfK on

Twitter: https://twitter.com/GfK

    For the full study findings and insights - including results for individual

providers - please contact: Frans Janssen, tel. +56-223-386-600 or

Frans.Janssen@gfk.com.

Source: GfK