AND THE SME MARKET? IMPROVING THE CUSTOMER EXPERIENCE COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

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1 AND THE SME MARKET? IMPROVING THE CUSTOMER EXPERIENCE

2 SHOULD SERVICE PROVIDERS PUT MORE FOCUS ON THE SME MARKET? Service providers are focused on the highly competitive consumer market or very large enterprises. Many have yet to create truly robust retail operations for the small and medium enterprise (SME) segment that will provide these diverse customers with a differentiated and relevant experience. The SME segment has been somewhat neglected. The perception is that it is too costly to provide tailored solutions for SMEs. The service providers find it expensive to target SMEs, in part because of their higher cost structure... - Interview with Dan O Connell, Gartner 2

3 THE SME MARKET OFFERS HUGE BUSINESS OPPORTUNITIES SMEs spent $510 billion worldwide in IT in 2011 (+6% YoY). SME IT spending will approach $544 billion by the end of This $35 billion increase will be greater than the $29 billion gain of In the U.S., SMEs spent approximately $26 billion in 2010 just on mobile communications solutions. Most spending (69%) is directed towards voice and data services. By 2015, the U.S. SME market will have approximately 56.4 million subscriptions this represents a compound annual growth rate (CAGR) of 5.4% and outpaces the overall market. Source: IDC, Gartner 3

4 WHERE SHOULD SERVICE PROVIDERS FOCUS THEIR ATTENTION? ALCATEL-LUCENT RESEARCH SHOWS THAT TO RETAIN AND INCREASE THEIR SHARE OF THIS LUCRATIVE SEGMENT, SERVICE PROVIDERS MUST CREATE A BETTER EXPERIENCE FOR THEIR SME CUSTOMERS THROUGH ALL THE TOUCH POINTS OF THE CUSTOMER JOURNEY. 4

5 METHODOLOGY HOW WE DID THE STUDIES SME CUSTOMERS 3321 quantitative online respondents Owners, influencers and decision makers with a company size of and regular CSP interaction face-to-face, online or on the phone in 11 countries* 16 focus groups in India and U.S.A. Completed in November 2011 SERVICE PROVIDER EMPLOYEES 868 quantitative online respondents Interacts with customers or business users at least once a week face-to-face, online or on the phone in 11 countries* 24 telephone qualitative two-hour interviews in India and U.S.A. Completed in January 2012 * Countries studied: Australia, Brazil, Canada, China, France, Germany, India, Mexico, Russia, South Africa, Turkey, United Kingdom And United States 5

6 WITH SMEs, TELECOM DECISIONS ARE MORE CLOSELY LINKED TO PERSONAL EXPERIENCE SME telecom decision makers come from a wide range of departments. They are not telecom specialists. As a consequence they make their decisions based on their personal experience. WHICH DEPARTMENT OR WORKGROUP WITHIN THIS ORGANIZATION ARE YOU, YOURSELF, PART OF? 25% 24% HOW MUCH DOES YOUR PERSONAL EXPERIENCE WITH SERVICE PROVIDERS INFLUENCE YOUR BUSINESS DECISIONS WHEN CHOOSING YOUR SERVICE PROVIDER? 5% 12% 10% 6% 5% 5% 4% 3% 3% 1% 1% Administration/Operations (845) Accounting/Finance (394) Marketing and Sales (183) Other (167) Procurement (116) Communications/Public Relations (44) SME EMPLOYEES IT Department (797) C-Suite/Executive (332) Customer Service (172) Research and Development (126) Human Resources (106) Legal Services (39) 95% Strongly/somewhat influences my decisions Has little or no influence on my decisions THE SME SEGMENT IS A COMPLEX MIDDLE GROUND BETWEEN ENTERPRISE AND THE CONSUMER MARKETS. 6

7 AT FIRST SIGHT, EVERYTHING LOOKS GOOD THEIR INTERACTION IS IDEAL. 7

8 SERVICE PROVIDER EMPLOYEES BELIEVE IN THEIR OWN AND THEIR COMPANY S ABILITY TO MEET CUSTOMER NEEDS PLEASE INDICATE WHETHER YOU AGREE OR DISAGREE WITH EACH STATEMENT ABOUT YOUR COMPANY. 78% 83% 82% 80% 78% 72% of service provider employees believe that their personal effectiveness at providing a great customer experience is very good/excellent + STRONGLY/SOMEWHAT AGREE 30% My customers trust my company (868) My company provides a good customer experience (868) My company provides the right combination of products and services at a competitive price (868) It is easy for my customers to make a purchase with my company (868) My customers receive the same quality of customer interactions every time from my company (868) My customers have to wait long in call queues (868) 8

9 AND SMEs ARE VERY SATISFIED WITH THEIR SERVICE PROVIDERS Almost 9 out of 10 are satisfied with their service provider. This is confirmed by a good overall positive NPS at 4.3% and a good customer experience delivery. WHAT IS YOUR OVERALL SATISFACTION LEVEL TOWARDS YOUR SERVICE PROVIDER? 51% HOW WOULD YOU RATE HOW YOUR SERVICE PROVIDER DELIVERS ON ITS PROMISE TO PROVIDE A GREAT CUSTOMER EXPERIENCE? 36% 14% 11% 8% 5% 1% 75% SME CUSTOMERS Strongly satisfied (1182) Neutral (255) Strongly dissatisfied (31) Somewhat satisfied (1699) Somewhat dissatisfied (154) Falls below expectations Meets expectations Exceeds expectations 9

10 BUT REALITY IS NOT SO IDEAL 10

11 DESPITE THE FACT THEY ARE HAPPY, SERVICE PROVIDERS DO NOT OWN THE CUSTOMER Service providers are not doing enough to develop customer loyalty in the SME market. More than 50% of SMEs have at least two mobile phone providers. Only 3% of SMEs have a service provider bundled offer (mobile, fixed line and Internet services). On average, SMEs have 2.2 mobile voice service providers, 1.9 mobile data service providers, 1.5 Internet service providers, 1.4 fixed voice service providers HOW MANY SERVICE PROVIDERS DOES YOUR COMPANY USE FOR THE FOLLOWING SERVICES? MOBILE VOICE MOBILE DATA INTERNET FIXED VOICE AS A CONSEQUENCE, SMEs HAVE TO MANAGE SEVERAL SERVICE PROVIDERS, WHICH IS A WASTE OF TIME AND ENERGY FOR THEM. 11

12 NET PROMOTER SCORE DOES NOT PROVIDE AN ACCURATE PICTURE NPS is a good way of assessing and understanding a customer s emotional engagement. BUT NPS does not assess functional requirements WHAT IS THE PRIMARY REASON YOU CHOSE YOUR PROVIDER? 25% While meeting functional requirements is THE most important in SME eyes. Over 40% of customer satisfaction is based on network quality. 11% 10% 9% 9% 7% 5% 3% SATISFACTION IS BASED ON NETWORK QUALITY Is reliable/offers a great network (1312) Is a price leader (324) Is a quality leader (283) Is secure (164) Is a market leader (353) Offers great breadth of product offerings (303) Offers great customer support (229) Is an innovator (106) SERVICE PROVIDERS NEED ONE VIEW OF THEIR CUSTOMERS. 12

13 SERVICE PROVIDERS ARE A LONG WAY FROM ONE VIEW OF THE CUSTOMER On average, SMEs interact with their service providers 4 times per month! HOW OFTEN WOULD YOU SAY YOU INTERACT WITH YOUR SERVICE PROVIDER ON BEHALF OF YOUR BUSINESS? 46% 32% 14% 8% SME CUSTOMERS One time per month or less (1531) Two to three times per month (1079) Once a week (460) Daily (251) 13

14 SERVICE PROVIDER EMPLOYEES REPORTED NEED FOR IMPROVED SYSTEMS Over 50% of service provider employees have no tools or systems that warn them when a customer is likely to churn!! DO YOU HAVE PROCESSES OR SYSTEMS TO HELP YOU DETECT WHETHER A CUSTOMER IS LIKELY TO LEAVE? WHAT TYPES OF PROCESSES OR SYSTEMS HELP YOU DETECT WHETHER A CUSTOMER IS LIKELY TO SWITCH TO ANOTHER OPERATOR? Select all answers that apply. 50% 50% 50% 26% 19% 3% 17% EMPLOYEES Yes No No systems (438) A customer triggers an event that warns me the customer is likely to leave (224) I receive a regular customer list of at-risk customer (167) Other (22) The at-risk customer is flagged automatically in a portal (145) EMPLOYEES DO NOT HAVE ENOUGH PRO-ACTIVE INDICATORS TO ANTICIPATE CHURN OR PROPOSE RELEVANT OFFERS. 14

15 SERVICE PROVIDER KEY PERFORMANCE INDICATORS ARE FRAGMENTED AND NUMEROUS Service providers are using a wide range of indicators that are really heterogeneous. AS AN EMPLOYEE WHO WORKS PRIMARILY ON THE PHONE, HOW IS YOUR JOB PERFORMANCE MEASURED? Select all answers that apply. 49% 44% 31% 28% 27% 26% 23% 22% 20% 13% 5% 12% SERVICE PROVIDER EMPLOYEES Number of issues resolved (129) Up-sell success (72) Attendance record (53) Customer satisfaction scores (116) Number of calls (69) Peer appraisals (34) Ensuring customers stay with the company (83) Complaints vs. Commendations (61) Other (13) Call handling time (75) Managers monitoring calls (58) My performance is not measured (33) 15

16 WHICH LEADS TO SURPRISING FACTS For example, 6 customers out of 10 always or often need to repeat information when their calls are transferred. WHEN YOU GET TRANSFERRED TO OTHER WITHIN YOUR TELECOM SERVICE PROVIDER DO YOU HAVE TO REPEAT YOUR INFORMATION? 58% 37% 5% SME CUSTOMERS Always/often (1926) Occasionally (1216) Never (179) THE SINGLE VIEW OF THE CUSTOMER AND UNIFICATION OF THE CUSTOMER EXPERIENCE STILL HAS A LONG WAY TO GO. 16

17 AS A CONSEQUENCE, IMPROVING THE SME CUSTOMER EXPERIENCE IS AN IMPERATIVE FOR EARNING AND KEEPING THEIR LOYALTY. 17

18 SMEs WANT ONGOING CONNECTION WITH SERVICE PROVIDERS An overwhelming majority of SME customers are happy to talk to their service provider. A quarterly contact in addition to incident follow-up would be the most acceptable. 89% of SMEs are willing to spend time with their service provider to get the most appropriate solutions and services for their business HOW OFTEN IS ACCEPTABLE FOR YOUR SERVICE PROVIDER TO ASK FOR YOUR FEEDBACK ABOUT YOUR CUSTOMER EXPERIENCE? 37% 24% 23% SME CUSTOMERS 16% Quarterly (1224) After an incident (811) Annually (751) Monthly (535) 18

19 IMPROVING FUNCTIONAL REQUIREMENTS IS THE MOST IMPORTANT IMPROVEMENT SERVICE PROVIDERS CAN MAKE WHAT IS THE PRIMARY AREA YOUR SERVICE PROVIDERS SHOULD WORK ON TO CREATE A GREAT OVERALL CUSTOMER EXPERIENCE FOR YOU? 24% 21% 9% 7% 6% 6% 5% 4% SME CUSTOMERS Service quality: The experience while using the service (801) Plan flexibility: The flexibility and features of the service plan (286) Ease of doing business: The ease of interacting with the service provider (208) Portfolio: The breadth and depth of the types of services offered (180) Pricing: The overall pricing (709) Interaction quality: The quality of the customer service support (221) Human interaction: Experience of interaction with a person on the phone, in-person or online (201) Reward offered: Rewards offered for loyalty or customer value (131) 19

20 GREATER CUSTOMER CARE IS THE MAJOR IMPROVEMENT FOR SERVICE PROVIDER EMPLOYEES Customer care integration, employee empowerment and better tools are the top three improvements expected. WHAT IS THE NUMBER ONE AREA YOU BELIEVE YOUR COMPANY SHOULD WORK ON TO CREEATE A GREAT OVERALL CUSTOM? 21% 13% 11% 8% 7% 6% 6% 5% EMPLOYEES Care about customers/offer personalized and faster customer services (181) Provide you with fast, easy-to-use tools to solve customer issues (94) Follow up with issues (61) Offer better applications, content and network services (49) Have management listen more to employees on the front lines (110) Increase workforce to handle volume of calls and provide faster assistance (72) Build a better infrastructure (56) Offer wider variety and more innovative products (41) 20

21 CROSS-CHANNEL INTEGRATION AND ANALYTICS ARE CRITICAL, NOT JUST THE DATA SOURCES The main data sources should include transactional data, attitudinal survey data and unstructured data from call centers and web operations. WHAT DO YOU THINK IS THE MOST EFFECTIVE AND ACCEPTABLE WAY FOR YOUR COMPANY TO MEASURE CUSTOMER EXPERIENCE? 19% Segmentation is required to provide different treatments. Segmentation based on identified touchpoints and decision points with different conclusions drawn and broken down by segment. Service providers should also focus on social network services analytics. Targeting the customer experience based on this data is a sure-fire way to improve the value of existing customers and move a customer from a lower-value segment to a segment with higher value. 15% 14% 14% 12% 10% EMPLOYEES Customer care recordings (152) Telephone surveys (116) s or text messages from customers (96) Tracking social networking sites and technology blogs (49) Paper surveys (22) Other (17) 6% 4% 3% Web online surveys (119) surveys (114) Interviews with employees (85) Tracking media and press (32) SMS surveys (15) 2% 2% 21

22 AND CREATE A CUSTOMER EXPERIENCE CHAMPION PROGRAM Customer experience champions should be in an appropriate position to affect change and establish a culture that puts the customer at the heart of the organization. Champions should also be employed to motivate the organization, be a devoted representative for the customer, and reach out to dissatisfied and angry customers to attempt a resolution. Training and support for service provider employees is clearly important and desired. Furthermore, a team approach should be considered to prevent individual burn out. WHAT RECOGNITION AWARDS OR PROGRAMS DO YOU MOST LIKE TO RECEIVE? 73% of service provider employees believe that the training offered by their company for their job is very/somewhat effective 36% 23% 9% Cash rewards (233) Points program for purchases (34) Employee of the month/year (23) Free or discounted phone service (15) Plaques/certificates/trophies (9) 5% 5% 4% 4% 4% 3% 2% 2% EMPLOYEES Incentives (149) Customer kudos (33) Gift cards (22) Discounts on newest phones (10) Peer-to-peer awards (8) 2% 1% 1% 1% Manager recognition (59) Congratulations notes/appreciation letters (24) Small gestures/occasional goodies (21) Free luncheons (10) Other (6) 22

23 TO CONCLUDE 23

24 SERVICE PROVIDERS HAVE TO ADAPT TO THE CUSTOMER EXPERIENCE (R)EVOLUTION Service providers need to move ahead with their plans to introduce services and systems to create a better overall telecom customer experience with relevant performance indicators to better understand SME DNA. Service providers need one view of a customer to gather NPS, assess emotional engagement and Customer Effort Score (CES), and assess functional requirements. Service providers should also improve internal processes so they can react quickly to SME needs and anticipate SME expectations. Service providers should become a trusted advisor and replace the provider/customer relationship by a real partnership with each SME customer. Service providers should provide differentiated service to meet SME needs while learning from Consumer experiences and applying them to the SME where there are commonalities. IN THE CURRENT MULTI-DIMENSIONAL MARKET SATURATION, CUSTOMER EXPERIENCE CLEARLY BECOMES A POINT OF DISTINCTION. THIS WILL ACTUALLY HAVE THE KNOCK-ON EFFECT OF INCREASING MARKET SHARE AND REVENUE, WHICH IS WHAT SERVICE PROVIDERS WANT IN THE FIRST PLACE. 24

25 MARKET AND CONSUMER INSIGHT Market Knowledge Sharpens your Business Edge Market and Consumer Insight (MCI) investigates links between consumer behavior, market and technological trends to help Alcatel-Lucent and its clients, communication service providers, make more informed and impactful business decisions. FOR ADDITIONAL INSIGHTS EXPLORE THE MARKET AND CONSUMER INSIGHT WEBSITE AT: MCI experts dig deeper and reach farther to provide information that helps communication service providers formulate new thinking, including: Global and regional, urban and rural, insights Research on consumer, market and technological trends FOR FURTHER INFORMATION CONTACT: 25

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