ConsumerLab. Transforming experiences. Understanding Indian consumers expectations of their mobile operator

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1 ConsumerLab Transforming experiences Understanding Indian consumers expectations of their mobile operator An Ericsson Consumer Insight Summary Report October 2013

2 METHODOLOGY Consumer research > Age: years > Socio-economic classes A-E > 16 urban cities in India, including the top 8 cities as well as smaller cities > Prepaid and postpaid subscribers split: 95 percent 5 percent > 22 in-depth qualitative interviews > 9 focus group discussions > 4,003 quantitative face-to-face interviews contents InTroduction and key findings 3 benchmarking the consumer experience 4 what frustrates consumers? 6 satisfaction vs. importance 7 The impact of good and bad experiences 8 Mobile data & customer service challenges 9 supporting mobile broadband users 10 Exceeding consumer expectations 10 Mobile operator customer care agents > 10 in-depth face-to-face interviews Ludhiana > 2 focus group discussions > 200 quantitative face-to-face research responses DELHI jaipur LUCKNOW guwahati Aligarh ahmedabad PATNA Social media listening exercise indore KOLKATA > Monitored and mined social media posts relating to mobile broadband in India between June 2011 and Jan 2013 MUMBAI PUNE Bhubaneswar HYDERABAD Interpreting the results > Survey results represent the voice of 100 million urban Indian mobile users bangalore CHENNAI Consumer research only Consumer and customer care research Cochin the voice of the consumer Ericsson ConsumerLab has close to 20 years experience of studying people s behaviors and values, including the way they act and think about ICT products and services. Ericsson ConsumerLab provides unique insights on market and consumer trends. Ericsson ConsumerLab gains its knowledge through a global consumer research program based on interviews with 100,000 individuals each year, in more than 40 countries and 15 megacities statistically representing the views of 1.1 billion people. Both quantitative and qualitative methods are used, and hundreds of hours are spent with consumers from different cultures. To be close to the market and consumers, Ericsson ConsumerLab has analysts in all regions where Ericsson is present, which gives a thorough global understanding of the ICT market and business models. All ConsumerLab reports can be found at: 2 ERICSSON ConsumerLab Transforming experiences

3 a new world of consumer expectations From online shopping through to fast food and insurance, today s consumer interacts with many different companies across a broad range of industries. Almost half of urban Indians interact with an average of at least four service companies at any given time in a week. Their perception of some of these service companies, and the quality of interactions with them, sets firm service level expectations that apply across the board. When it comes to their mobile operators, consumers do not just compare their experiences with other operators, but with the experiences of their interactions across all service industries, from pizza delivery companies to online shopping providers. Key findings > Consumers compare their experience with mobile operators to service companies from other industries and thus have different expectations one third of existing mobile users feel that operators are the most frustrating service companies to interact with. > There is no single wonder pill to drive consumer satisfaction across various interactions with mobile operators there are differences in what mobile users state is most important to them when interacting with their operator. In India, initial purchase process and customer service are rated as most important. > Customer service is in need of transformation three in five customer care agents find it difficult to support mobile data users with the tools and information available to them. > Retaining profitable users will rely on prioritizing and identifying shifting consumer needs these include basic needs such as billing, as well as those which increase satisfaction proportionally, including network performance and delighters like assured mobile internet speeds, rewards and loyalty programs. > Mobile users complain, but not to their operators one in four urban Indian mobile users is currently facing some sort of issue with their operator but only half of all issues are reported. > Consumer expectations are growing in line with device complexity and mobile data usage mobile operators are facing a rate of churn that is increasing as users adopt new advanced data services. ERICSSON ConsumerLab Transforming experiences 3

4 BENCHMARKING THE consumer EXPERIENCE I shopped online, and the item was delivered next day with a handwritten personal note from the seller thanking me for the purchase and offering free return if I did not like the item. This is what I call delighting consumers. Female, 22 years old, Delhi Figure 1: Ericsson ConsumerLab industry consumer experience rankings for India 1 Airline 2 Online shopping 3 Fast food 4 Broadband provider 5 Private radio taxi 6 Satellite TV 7 Insurance provider 8 Cable TV provider 9 Credit card firm For this study, Ericsson ConsumerLab has ranked 12 service industries on the level of overall consumer experience that they offer. These rankings are based on how consumers perceive each of the industries to be performing on nine key performance attributes. These attributes were derived through in-depth discussions with consumers. To start with, the impact of the nine performance attributes was calculated separately. This analysis revealed that the factor which has the maximum impact on consumer satisfaction across all the industries was the ability to solve problems quickly. We then analyzed the impact of these attributes in driving overall satisfaction within each industry. This was compared against the current consumer satisfaction ratings of each attribute for each industry. This comparison enabled us to create the consumer experience rankings shown in figure 1. Mobile operators are second only to utility providers in having the lowest customer experience rating. 9 performance attributes 10 Banking 11 Mobile operator 12 Utility provider Source: Ericsson ConsumerLab Transforming Experiences, 2013 Base: Urban mobile users > Quick resolution of problems > Transparency in billing/ bill understanding > Puts customer needs first > Keeps its promises > Motivated and friendly staff > Ease of making payments > Knowledge and understanding of what products and services the customer already uses > Relevant and timely communication > Regularly introduces new products and services to the market 4 ERICSSON ConsumerLab Transforming experiences

5 On the other hand, airlines, online shopping and fast food chains rate highest. The possible reasons for this, highlighted by consumers who ranked these industries, was that they both offer transparency and are good at meeting punctuality expectations. In the case of airlines, where low cost operators are popular, consumers know exactly what they are paying for. They do not have high service requirements because getting to their destination on time is more important. Online shopping providers rank better than other industries because they offer innovative ways of making payments (such as cash on delivery, timely delivery, and personalization). They are also perceived to be very good at solving problems quickly. Other industries are raising the bar on meeting consumer expectations. It is now up to telecommunications companies to catch up by finding new ways of improving the consumer experience. What drives consumer satisfaction with operators? In order to identify which parts of the consumer journey were rated as most important, we identified five touch points that reflect interactions mobile phone customers have with their operator. We then analyzed the relative importance of these in driving overall consumer satisfaction. Figure 2 shows the relative importance of the five different service area touch points in the four markets studied. The relative importance of touch points shown here for the Russian, Brazilian and US markets were taken from Ericsson s Optimal Consumer Experience 2012 report. It clearly shows that service and support is the most important factor across all four countries. Figure 2: Relative importance of touchpoints in driving consumer satisfaction Initial purchase process Billing & payment Account management Service & support Loyalty building 27% 21% 20% 25% 7% 1% 44% 4% 50% 1% 1% 19% 32% 47% 1% 29% 13% 2% 49% 8% Sources: Ericsson ConsumerLab, Optimal consumer experience, 2012, Ericsson ConsumerLab Transforming Experiences, India Base: 6,909 mobile users in US, Russia, Brazil, India Relative importance of touchpoints for US, Brazil and Russia were identified using 58 parameters. For India, 33 relevant parameters were used. Can they be like pizza delivery? Promising me they can fix issues in 30 minutes. Male, 26 years old, Mumbai In India, the initial purchase process is most important. It is worth noting that the measurements for India are much flatter across the board when compared to the other markets. The only exception here is loyalty building. There is no single factor which will improve the consumer experience a number of factors need to be addressed. Different consumer segments have different needs. For example, network performance and customer service are important to young people, while basic phone users require more support in terms of billing and payment and account management making these factors more important to them. Network performance, mobile internet performance and privacy were additional factors identified as having an impact on the consumer experience for mobile phone users. Therefore, this also needs to be taken into consideration. Start at the beginning Consumers are often faced with a challenge the moment they come into contact with an operator. The process of choosing a mobile phone plan or offer in the first place can be confusing. Service providers will often offer a myriad of plans and information about availability, and what is included often differs between the operator s call centers, website and physical stores. 1/3 of mobile subscribers do not find plans which match their usage patterns Most consumers find it difficult to identify which plan best suits their usage and will only find out if it is right for them once they have started using it by which point it is already too late. Most will then face a bill shock or spend more money on account of not being able to identify an optimal plan. Sorting through various prepaid plans and then choosing the best is like shooting in the dark. They purposely keep it very complex. Male, 30 years old, Delhi ERICSSON ConsumerLab Transforming experiences 5

6 WHAT FRUSTRATES CONSUMERS? One in four mobile users currently faces some sort of issue A quarter of all urban mobile users reported facing some sort of problem with their mobile operator, and on average Indian users face up to six different issues on at least a weekly basis. Figure 3 shows what these issues are. The three most common problems are network, mobile internet or billing and charging related. Other issues include poor customer service, unsolicited calls or SMS that infringe privacy, and bad experiences at the operator s store or in accessing their website. However, many of these issues are not being reported to the operator. On average, just under half of all problems are relayed back. The reason for the lack of complaints is that customers do not want to go through the hassle of contacting the operator. The thought of long periods stuck on hold and then having to go through monotonous troubleshooting puts them off. Today almost half of all urban Indian mobile phone consumers are thinking about switching operator due to a poor experience. The 2 biggest reasons for this poor customer support and poor network or mobile internet performance together account for 54 percent of all issues faced by those looking to switch operators. Figure 3: Percentage of mobile users who currently face issues Network related 32% Problems relating to billing and unfair balance deductions from prepaid accounts are an exception but this is merely a reflection of the lack of trust consumers have in operators to correct issues that directly relate to their money. The silent sufferers On average just half of all issues faced by a mobile user are reported to the operator Mobile internet related Billing and prepaid charging Privacy Poor customer service Other touchpoints website and store 29% 25% 25% 20% 13% This shows that people who do complain to operators are actually only a subset of those who are dissatisfied. Source: Ericsson ConsumerLab Transforming Experiences, 2013 Base: All mobile users who are facing an issue 6 ERICSSON ConsumerLab Transforming experiences

7 SATISFACTION VS. IMPORTANCE Figure 4: Combining satisfaction and importance Low DERIVED IMPORTANCE High SATISFACTION Low High Areas to sustain Privacy Loyalty building Areas of concern Mobile internet performance Network performance (voice) Billing and payment Account management Initial purchase experience Service/support Strongest areas Areas to improve Source: Ericsson ConsumerLab Transforming Experiences, Base: All mobile users Figure 4 shows satisfaction plotted against importance for eight different areas of interaction with mobile operators. Billing and payment, account management and service and support are all areas which need immediate attention if operators want to improve consumer experience. While not very important in general, loyalty building and privacy in the form of curbing unsolicited calls and text messages, does matter to a very small number of high-spending consumers. Mobile internet performance also rates low in terms of satisfaction, however, as the ubiquity of mobile broadband grows, this factor is likely to grow in importance. On the other hand, network performance and coverage for voice calls both see stable high satisfaction, mainly because the relative maturity of the technology means that few issues arise and consumers know what to expect. Billing and unfair balance deductions from prepaid accounts in particular is an area where consumers have zero tolerance for discrepancies. In fact, 78 percent rate billing and charging accuracy as very important and would like to see a penalty fee imposed if operators overcharge. Quickly resolving billing issues is critical, as many consumers will immediately consider switching provider, even over very small sums of money. Figure 5 digs down one level deeper, identifying the specific points which need to be fixed today and monitored in the future to ensure customer satisfaction. Figure 5: Key drivers of consumer satisfaction DERIVED IMPORTANCE High Low FIX > First contact resolution i.e. customer service to solve issues on the first attempt > Accuracy in billing/charging and quick resolution of related issues > Advanced notification of price changes on your plan/account MONITOR > 360 degree view of service usage and interaction history of subscribers > Mobile internet speed and reliability > Skill and expertise of customer care agents to solve technical issues > Network coverage while roaming > Ease of starting/stopping services > Rewarding for loyalty Source: Ericsson ConsumerLab Transforming Experiences India, 2013 Base: All mobile users ERICSSON ConsumerLab Transforming experiences 7

8 THE IMPACT OF GOOD AND BAD EXPERIENCEs Of course, not all experiences are bad, and a successful interaction can result in the consumer liking the operator on social networks, spreading good word of mouth among friends and family. However, as shown in figure 6, when it comes to having a bad experience consumers are much less likely to get in contact with the operator and many will simply terminate the relationship altogether. In fact, consumer satisfaction surveys are only enabling operators to listen to two percent of their dissatisfied customers. This means that relying on customer survey feedback alone will not provide a full picture, as it has virtually no information on the customers that are most at risk of churning. Operators need to be proactive and find other channels through which to measure customer satisfaction, such as monitoring social media or monitoring real time quality of service. Transforming customer care For many consumers, customer care is still the channel of choice for seeking support, and this will continue to be the case in the future. However, local retailers are also a preferred point of contact. This is because they are generally more trusted, as they are used to dealing directly with a wide variety of handsets on a day-to-day basis, and are not necessarily associated with a single brand. They are also seen as more approachable especially by low income groups that may not be familiar with the language used by customer care representatives. In fact, 55 percent of low income users rely on face-to-face interactions with retailers to solve queries, rather than calling customer care. Figure 6: What happens after a good or bad experience? Percentage of consumers who said a good experience leads to: Percentage of consumers who said a bad experience leads to: Sharing their experience with friends and family 59% Thinking of terminating the relationship 23% Responding to a satisfaction survey 15% Registering a complaint 6% Likes, posts and tweets 7% Responding to a satisfaction survey 2% Source: Ericsson ConsumerLab Transforming Experiences India, 2013 Base: Mobile phone users 8 ERICSSON ConsumerLab Transforming experiences

9 Mobile data & customer service challenges 3 out of 5 customer care agents say: The current tools and information available to me are not sufficient to create a positive consumer experience. Customer care and the new mobile data paradigm As part of this study, we interviewed 200 customer care agents, manning call centers for mobile operators across 8 Indian cities, to better understand their needs when it comes to supporting consumers. Many agents work in high pressure environments in which their performance is judged based on their average call handling time. This is counter-productive to providing a great customer service. Today, the complexity of the software available to operator customer care agents is an issue. Over half struggle with the systems and processes that they use and many say that the tools and information they have available to them are not sufficient to create a positive consumer experience. The result of these factors is longer, more frustrating call times for consumers. The number of new devices and technologies is growing and creates a challenge for customer service agents. Figure 7 shows that smartphones and mobile broadband users generate more complaints than the overall average. This is because newer, more advanced technologies tend to require more complex solutions and are owned by heavy usage subscribers. Figure 7: Customer service calls over six months Mobile broadband users Smartphone Overall 47% 44% 42% 35% 37% At least twice More than three times Never Source: Ericsson ConsumerLab Transforming Experiences India, 2013 Base: Urban mobile phone users 18% 19% 27% 31% Figure 8 shows which issues customer care agents say are most time consuming to resolve. Billing and prepaid charging issues came out on top, as it requires back-end support to trace. However, mobile data issues are also a growing problem. The reason for this is that the current call center software does not give a complete view of consumers mobile data usage and quality of service data. 40 percent say they have to look through 4 or more different screens or programs to solve issues. Most of the time they also have to remember the order in which these have to be accessed. Figure 8: Issues that are the most time consuming to resolve Billing discrepancy Mobile data issues Network 56% 48% 37% Source: Ericsson ConsumerLab Transforming Experiences India, 2013 Base: Customer care agents In response to this, 77 percent of customer care agents agree that they need a single unified view of the consumer and intelligent tools. These would analyze a customer s usage as a basis for recommending which plans and offers are optimized to suit their needs, as well as acknowledge and trace issues. This would allow the agents to make decisions that are in the best interest of consumers. According to customer care agents, the benefits of using intelligent systems would include increased satisfaction and retention and improved first-time resolution of issues. This final point was highlighted on page four as being the most important customer service attribute and the area which consumers are least satisfied with in the current scenario. ERICSSON ConsumerLab Transforming experiences 9

10 Supporting Mobile Broadband customers Listening to online conversations We conducted a study of social media to find out what people were saying online about their experience with operators, with a specific focus on their mobile broadband service. Over 250 million tweets and 1.8 million posts across Facebook, Twitter, blogs and complaint forums were sifted through to come up with 100,000 key conversations on mobile broadband experience among Indian users. Figure 9: Drivers of negative sentiments Mobile internet performance Billing or charging issues Technical support/ customer care Source: Ericsson ConsumerLab Transforming Experiences, 2013 Base: 25,000 unique online users, India 48% 31 % 21% Of the online buzz associated with mobile broadband, 45 percent was negative whereas just 29 percent was positive. The rest was neutral. Figure 9 shows the drivers for negative sentiments only. It was found that technical support and customer care is the greatest issue being discussed, with a particular focus on unattended complaints. This is an important issue, as increased satisfaction with customer service has a direct impact on a mobile broadband consumer s loyalty. Those that are most satisfied with customer service are three times more likely to stay loyal than a dissatisfied customer. From this study we have identified that there are three priority drivers for improving the mobile broadband user experience and growing profitability. These include customer service and support, mobile internet performance and account management in other words putting users in control of their own usage and being transparent about any changes made to their account. Exceeding consumer expectations Satisfaction alone is not enough to successfully diagnose loyalty. When asked if they are satisfied many respond yes. In fact, perceptible differences among operator brands are quickly evaporating and 61 percent say that there is hardly any differentiation when it comes to operators. This makes it very difficult for operators to understand and gauge consumer loyalty. Figure 10 outlines a new approach which compares how likely the customer is to switch operator against how likely they are to promote their provider by recommending it to friends and family. The question for operators is which of these segments are advocates for their brand, and which should be focused on in order to improve profits? Defectors make up a large portion of the users questioned. However, despite this, the profitability of this segment is minimal. On the other hand, the vulnerable segment consists of high spenders who own smartphones and use mobile data. Figure 10: Consumer loyalty vs. advocacy High INTENTION TO SWITCH Low Defectors 40% Vulnerable 8% No attachment and poor perception of the brand they will not stay with their current provider Passive 20% Indifferent consumers with a weak relationship with the provider they feel trapped ADVOCACY Source: Ericsson ConsumerLab Transforming Experiences Base: 4,003 urban Indian mobile phone users They do recommend the brand but are close to leaving due to poor experience Secure 32% Are most satisfied brand advocates they are 5 times more likely to increase spend compared to defectors High 10 ERICSSON ConsumerLab Transforming experiences

11 Figure 11: Kano Model classifying and prioritizing consumer needs Not fulfilled Delight Delighters/ attractive needs Basic needs Performance needs Fulfilled Delighters > Rewards for higher usage and spending > Mobile data plan with assured speed Performance needs > Quick and easy activation > Rapid call transfer with no wait time > Network performance > Personalization on plans based on usage > Advance notifcation of price changes > Assured problem resolution Frustration Basic needs > Billing/charging accuracy Source: Ericsson ConsumerLab Transforming Experiences India, 2013 Base: Vulnerable consumer segment In fact, these affluent smartphone mobile data consumers are often among the top 10 percent of the mobile users that generate around 35 percent of overall revenue for operators. Figure 11 shows a framework called the Kano Model. Created in the 1980s by Professor Noriaki Kano, the model enables companies to classify consumer needs. For this study we have used it to identify which requirements will meet the vulnerable segment s basic needs, improve their satisfaction and exceed their expectations. These needs can be divided into three categories, depending on their ability to drive satisfaction or cause dissatisfaction. This helps operators understand which needs and attributes to focus on when developing products and services. Figure 11 also lists which curve each satisfaction parameter inhibits. Billing and charging accuracy is considered a basic hygiene factor and if not met will lead to a lot of frustration amongst customers. The performance needs curve features six parameters. Improving on these factors will have a direct correlation with the level of consumer satisfaction in other words, the more you put in, the more you get out. Of course this can also work in the opposite direction and operators that do not give these factors adequate attention risk frustrating their subscribers. The two attributes listed under delighters are services that customers do not necessarily expect, so failure to provide these services will not frustrate them. However, if operators do provide them it will act as a differentiator and please consumers by significantly boosting satisfaction levels and loyalty. However, what is interesting today might not be interesting tomorrow. What pleases consumers today could be the basic requirements of tomorrow and operators need to constantly evolve their offering as consumer needs change. Figure 12 shows which services smartphone users said they would be interested in for the future. These are areas which operators need to take action on today, if they intend to satisfy the consumers of tomorrow. Transforming the experience of tomorrow With technology developing at an ever-increasing rate, operators must adopt new strategies that focus on future needs. Both the initial purchase process and service and support are pivotal touchpoints in the consumer experience. If operators wish to improve their service in both areas, then they need to empower their staff with a single view of a customer s interactions, and enable them to make recommendations which best suit the individual. Ultimately, the battle for the hearts and minds of Indian consumers will be won on the front line. We have seen in this report that by embracing three key areas network performance, transparency and control and by improving customer service and the support experience, operators can exceed expectations. By doing this they transform the consumer experience from one that merely satisfies, to one that genuinely pleases consumers. Figure 12: Services that consumers requested for the future 60% A mobile application which periodically advises me with a better plan or recharge, keeping in mind my current consumption patterns 55% A single prepaid recharge for my broadband, smartphone, and satellite TV services, proportionally distributing it how I like 57% Customer care agents remotely identify and correct problems relating to my device or connection Source: Ericsson ConsumerLab Transforming Experiences India, 2013 Base: Smartphone users ERICSSON ConsumerLab Transforming experiences 11

12 Ericsson is a world-leading provider of communications technology and services. We are enabling the Networked Society with efficient real-time solutions that allow us all to study, work and live our lives more freely, in sustainable societies around the world. Our offering comprises services, software and infrastructure within Information and Communications Technology for telecom operators and other industries. Today 40 percent of the world s mobile traffic goes through Ericsson networks and we support customers networks servicing more than 2.5 billion subscriptions. We are more than 110,000 people working with customers in more than 180 countries. Founded in 1876, Ericsson is headquartered in Stockholm, Sweden. In 2012 the company s net sales were SEK billion (USD 33.8 billion). Ericsson is listed on NASDAQ OMX, Stockholm and NASDAQ, New York stock exchanges. The content of this document is subject to revision without notice due to continued progress in methodology, design and manufacturing. Ericsson shall have no liability for any error or damage of any kind resulting from the use of this document. Ericsson SE Stockholm, Sweden Telephone Fax EIL-13: Uen Ericsson AB 2013