The Connected Consumer Survey 2013: fixed broadband retention and upsell

Transcription

1 Research Report The Connected Consumer Survey 2013: fixed broadband retention and upsell June 2013 Martin Scott

2 2 Contents Slide no. 5. Executive summary 6. About this report % of respondents who threaten to change their service provider then follow through 8. Revenue growth strategies must focus on promoting value for money this can be achieved with higher speeds and bundle calibration 9. Respondents with quadruple-plays were half as likely to intend to churn as those who took fixed broadband on its own or only with a TV service 10. Consumers who watch premium online video content have faster fixed broadband than non-watchers, suggesting ISPs have an upsell opportunity 11. Implications and recommendations 12. Implications and recommendations [1] 13. Implications and recommendations [2] 14. Implications and recommendations [3] 15. Fixed broadband speeds, usage allowances and technologies 16. Operators will find it difficult to educate some consumers about access technologies, or even basic service information price rules everything 17. One potential approach for handling customer confusion the home CPE could influence consumers perceptions of service speeds 18. The UK has a higher penetration of usage-capped fixed broadband services than other survey countries the trend is still towards unlimited 19. Understanding and influencing fixed broadband customer retention Slide no. 20. Disruptive tariffs have increased churn rates in France and Spain 21. Increasing customers satisfaction scores by one or two points could halve their churn risk 22. Qualitative interpretation: bundling, NGA and a strong TV proposition drive customer retention 23. Quantitative interpretation: customer service and network reliability affect overall satisfaction more significantly than speed and price 24. The greatest difference in churn intention appears to be the difference between a consumer rating their provider as 2 out of 5 versus 3 out of Retention strategies should be directed towards home owners (not renters), families and younger consumers 26. A failure in operators ability to engender a sense of value for money is one of the main drivers of fixed broadband churn 27. Fixed broadband churn rates appear lower than those of mobile services and intention to churn peaks within the first year of subscription 28. Respondents with quadruple-plays were half as likely to intend to churn as those who took fixed broadband on its own or only with a TV service 29. Customers with high-speed services are less likely to plan to change service provider: speed upgrades could increase customers by +3% p.a. 30. Driving revenue growth by upselling and attracting new customers 31. Stimulating revenue growth by upselling and attracting new customers: after price, speed and reliability most influence the buying decision 32. Superfast broadband users are typically in family homes younger couples and residents of larger shared households are also interested

3 3 Contents Slide no. 33. The superfast broadband price premium appears to be less important to take-up than absolute price, availability and how the services are bundled 34. Operators can use reliability as a selling point for attracting customers, but what reliability exactly means is debatable 35. Bundling demographics remain stable which suggests further multi-play subscriber growth potential; operators will trade revenue against retention 36. Iliad has the highest customer satisfaction score for price its approach can be summarised in two steps 37. Using over-the-top services and devices to operators advantage 38. Operators can use services such as streaming music, online video and gaming to their own advantage in both direct and indirect ways 39. Netflix and LOVEFiLM have stimulated the consumption of paid-for online video services in the UK and USA ahead of other countries in our survey 40. Consumers who watch premium online video content have faster fixed broadband than non-watchers, suggesting ISPs have an upsell opportunity 41. The large installed base of games consoles is currently the most effective platform for delivering online video services 42. Operators can tailor their broadband services to better serve the high penetration of console-owning and gaming consumers Slide no. 43. Cloud gaming providers have had set-backs, but consumer take-up of services is promising % of respondents used streaming music services companies such as Deezer and Spotify are looking healthier than previously 45. People who listen to streaming music are more likely to churn therefore, our results do not strongly reflect the positive effect of bundling these services 46. Panel information and methodology 47. Methodology 48. Panel information: UK 49. Panel information: France 50. Panel information: Germany 51. Panel information: Spain 52. Panel information: Poland 53. Panel information: USA 54. About the author and Analysys Mason 55. About the author 56. About Analysys Mason 57. Research from Analysys Mason 58. Consulting from Analysys Mason

4 4 List of figures [1] Figure 1: Countries covered individually in this report Figure 2: Fixed broadband respondents who want to change service provider within 6 months, by country, Figure 3: High-priority factors when considering next fixed broadband service, by country Figure 4: Future (6-month) plans for fixed broadband, by combination of services bought from the same provider Figure 5: Market share of OTT video service providers, by country Figure 6: Average distribution of fixed broadband access technologies based on operator-derived reporting and respondents Figure 7: Distribution of respondents by claimed and actual fixed broadband access technology Figure 8: Distribution of fixed broadband downstream bandwidths, by access technology Figure 9: Distribution of fixed broadband usage allowances, by country Figure 10: Fixed broadband respondents who want to change service provider within 6 months, by country, Figure 11: Intention to change service provider within the next 6 months, by satisfaction level, Europe Figure 12: Overall satisfaction of fixed broadband customers who subscribe to selected operators, by absolute score, index and rank Figure 13: Linear regression model for the overall satisfaction of respondents against their satisfaction with specific aspects of the service on a scale of 1 to 5 Figure 14: Average overall customer satisfaction score (on a scale of 1 to 5) for different customer service and reliability scores Figure 15: Distribution of respondents who plan to change service provider, by overall satisfaction scores Figure 16: Intention to change fixed broadband service provider, by age and household situation Figure 17: Future (6-month) plans for fixed broadband, by type of living arrangement Figure 18: Reasons given by fixed broadband respondents for wishing to churn within the next 6 months, by country Figure 19: Six-month plans for fixed broadband, mobile broadband and mobile voice service, by time with service provider Figure 20: Future (6-month) plans for fixed broadband, by combination of services bought from the same provider Figure 21: Intention to change fixed broadband service provider, by downstream broadband speed and country Figure 22: High-priority factors when considering next fixed broadband service, by country Figure 23: Distribution of respondents who subscribe to fixed broadband services with download speeds of more than 30Mbps, by age and household situation Figure 24: Distribution of respondents who plan to change tariff in the next 6 months and cite higher speeds as their first priority, by age and household situation Figure 25: Price premium, take-up and satisfaction scores for different bandwidths, by country Figure 26: BT Retail fixed broadband market share, by access technology,

5 5 List of figures [2] Figure 27: Main priority when looking for a new fixed broadband provider Figure 28: Distribution of respondents who take at least triple-play services from their fixed broadband service provider, by age and household situation Figure 29: Average satisfaction score for the price of fixed broadband services, selected operators Figure 30: Fixed broadband net line additions by operator, France, 3Q Q 2012 Figure 31: Take-up of free and paid-for online video services, by country Figure 32: Market share of OTT video service providers, by country Figure 33: Fixed broadband speed distribution, by whether respondents are users of paid-for online video services Figure 34: Devices that enhance the capability of a basic TV set Figure 35: Ownership of consoles, by type Figure 36: Take-up of cloud gaming services, by country Figure 37: Penetration of cloud gaming, by age and gender Figure 38: Take-up of free and paid-for streaming music services, by country Figure 39: Market share of streaming music services, by country Figure 40: Take-up of streaming music services among the customers of fixed broadband service providers that have a partnership with a music service provider Figure 41: Survey respondents demographic data: UK, 2012 Figure 42: Survey respondents demographic data: France, 2012 Figure 43: Survey respondents demographic data: Germany, 2012 Figure 44: Survey respondents demographic data: Spain, 2012 Figure 45: Survey respondents demographic data: Poland, 2012 Figure 46: Survey respondents demographic data: USA, 2012

6 Percentage of respondents Household situation The Connected Consumer Survey 2013: fixed broadband retention and upsell 26 Retention strategies should be directed towards home owners (not renters), families and younger consumers The age and household demographics for fixed broadband customers who intend to churn provide a few notable trends. Respondents living in a family-like situation (that is, where children are present) were the most likely to change provider. This is probably driven by bandwidth demand because of children s higher adoption of IPenabled devices, as well as larger household sizes. Consumers aged were the most likely to plan to churn. The spend behaviour of this demographic may be shifting from services to devices. Respondents in this group are also likely to change household situation at some point, which may prompt churn. In last year s survey, we also identified that older consumers in family-like situations and younger single people also had a high tendency to churn. This year-onyear variance could be caused by the availability of new tariffs that attract particular demographics. Living arrangements (in terms of whether a customer owns or rents their home), appear to have little impact on likelihood to churn. A home owner was roughly as likely to churn as a tenant. However, it is important to note that our respondents included significantly more home owners than tenants, which suggests that home owners are actually a considerable target for retention strategies. Figure 16: Intention to change fixed broadband service provider, by age and household situation [Source: Analysys Mason, 2013] 1 60% 50% 40% 30% 20% 10% 0% All ages Single 9% 15% 12% 11% 11% 9% 11% Couple 10% 19% 9% 12% 6% 6% 9% Family-like 16% 15% 14% 13% 13% 8% 14% Large household 15% 14% 12% 12% 9% 12% 12% Lower All households 14% 16% 13% 12% 9% 7% 12% Higher Age range Percentage of respondents who want to change fixed broadband provider within the next 6 months. Figure 17: Future (6-month) plans for fixed broadband, by type of living arrangement [Source: Analysys Mason, 2013] 1 No planned change or unsure Plan to change package Plan to change provider Plan to give up FBB Home owner Tenant Other 1 Questions: "Do you plan to make any changes to your fixed broadband service in the next 6 months (for example, changing package, service provider, or giving up on fixed broadband altogether)?" and "What kind of change do you plan to make?"; n = 4445; respondents with a fixed broadband subscription.

7 30 Customers with high-speed services are less likely to plan to change service provider: speed upgrades could increase customers by +3% p.a. The speed of a fixed broadband service and customer retention seem to be related. We established on slide 27 that speed was the most-significant non-price-related reason for intending to change fixed broadband provider. The impact that speeds have on customer preference is further illustrated in Figure 21, which shows respondents who intend to change fixed broadband provider, by their current service speed. In the European countries in our study, fewer respondents with higher-speed connections intend to churn. In the USA, a greater proportion of higher-speed customers intended to churn, but this could be because of the low take-up of highspeed services in the USA, which led to a small sample. Take-up of higher-than-30mbps services is partly driven by operator push. Giving customers higher-speed services even if they are not willing to pay extra for them will probably reduce churn, because it will limit the number of customers who defect to rivals promising higher speeds or greater reliability. If providing higher-speed services reduced absolute churn by 14% (the percentage of respondents that cited this as the main reason they were changing provider in slide 27) then a typical provider would see an increase in net additions of 3% of their total subscriber base per year simply from reduced churn. For context, this is double the 2012 subscriber growth of operators such as Telefónica España and Virgin Media and comparable to Orange France. Figure 21: Intention to change fixed broadband service provider, by downstream broadband speed and country [Source: Analysys Mason, 2013] 1 Spain France Germany UK Poland USA 0% 5% 10% 15% 20% 25% Percentage of respondents Up to 8Mbps 9 30Mbps Greater than 30Mbps 1 Questions: various; n = 4445; respondents with a fixed broadband subscription.

8 55 Executive summary Implications and recommendations Fixed broadband speeds, usage allowances and technologies Understanding and influencing fixed broadband customer retention Driving revenue growth by upselling and attracting new customers Using over-the-top services and devices to operators advantage Panel information and methodology About the author and Analysys Mason

9 56 About the author Martin Scott (Principal Analyst) Martin leads Analysys Mason s Fixed Broadband and Media research programme. His primary areas of specialisation include fixed broadband retail pricing and bundling, and customer satisfaction and consumer-facing marketing strategy. Martin also specialises in statistics, surveys and the analysis of primary research, and he co-ordinates Analysys Mason s Connected Consumer series. He has produced research for Analysys Mason on different aspects of broadband (next-generation) access, consumer demand for present and next-generation services, and the business case for value-added services, such as videotelephony and threescreen advertising. Martin has a Master s degree in Mathematics from Oxford University.

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