Research Report The Connected Consumer Survey 2015: mobile customer retention March 2015 Patrick Rusby and Stephen Sale
2 About this report This report focuses on aspects of Analysys Mason s annual Connected Consumer Survey that relate to the behaviour, preferences and plans of mobile users in France, Germany, Indonesia, Malaysia, Morocco, Poland, Qatar, Saudi Arabia, South Africa, South Korea, Spain, Turkey, UAE, the UK and the USA. The survey was conducted in association with Survey Sampling International (SSI) and On Device Research. The research was conducted in July and August 2014. The survey groups in Europe and the USA were chosen to be demographically representative of the broader online consumer population, and those in Asia, the Middle East and Africa were chosen to be representative of the mobile- Internet-using population. We set quotas on age, gender and employment status to that effect. There were a minimum of 1000 respondents per country, and 22 174 respondents. This report focuses on several issues that are critical to mobile operators strategies for 2015, including: the drivers of churn and approaches to customer retention the potential impact of fixed mobile convergent bundling on operators mobile business the significance of Net Promoter Scores (NPS), and how operators can influence them. Figure 1: Geographical coverage of our Connected Consumer Survey 2015 [Source: Analysys Mason, 2015] USA Online survey France Spain Morocco UK (Survey Sampling International) Germany Poland Turkey Qatar UAE Saudi Arabia South Africa Indonesia South Korea Malaysia Browser-based mobile survey (On Device Research)
3 Contents Slide no. 6. Executive summary 7. Price is the key driver of churn for most age groups, but network factors (notably speed) were more important for the youngest respondents 8. Bundling fixed and mobile services does not necessarily reduce churn 9. There is a correlation between high data allowances and high NPS, but our results emphasise the importance of value, rather than just size 10. Recommendations 11. Recommendations 12. Key drivers of mobile customer churn 13. Price is the key driver of churn for most age groups, but network factors (notably speed) were more important for the youngest respondents 14. Price dominated churn decisions in Europe and the USA, but other factors came into play in Asia Pacific and MEA 15. Operators with the best coverage have higher NPS than competitors, but where all operators have good coverage, challengers have higher NPS 16. Pricing structures and churn 17. SIM-only customers award the highest NPS, but increased churn rates suggest that competition is bringing some volatility to the segment 18. Bundling fixed and mobile services does not necessarily reduce churn, despite positive correlations among certain service combinations 19. Examining the effectiveness of fixed mobile combinations in different countries provides positive and negative examples of the role of pricing Slide no. 20. Data pricing and its impact on retention 21. Data allowance has become a more important factor than voice minutes when selecting a tariff in Europe and the USA 22. The price of data was identified as more important than that of voice and messaging in APAC and MEA, but both are low priorities in South Korea 23. There is a correlation between higher data allowance and increased NPS, but our results emphasise the importance of value, not just size 24. Another dimension of data pricing is balancing the utilisation levels of allowances and managing overage 25. Operators must balance monetising overage with increased likelihood of churn but overage policies can complement rightsizing to improve NPS 26. Mobile data speed and customer satisfaction 27. Speed was a greater factor in churn among younger people who are also more likely to use their handset to watch OTT video content 28. Customers on high-speed 4G services awarded higher NPS than 3G customers, but speed is not the only variable between 3G and 4G users 29. 4G customers claim to use Wi-Fi more than 3G customers, but in general Wi-Fi usage is an indicator of concern about price and performance 30. Network coverage is also a significant driver of churn in some countries 31. Methodology and panel information 32. Methodology 33. Panel information: France and Germany
4 Contents Slide no. 34. Panel information: Indonesia and Malaysia 35. Panel information: Morocco and Poland 36. Panel information: Qatar and Saudi Arabia 37. Panel information: South Africa and South Korea 38. Panel information: Spain and Turkey 39. Panel information: UAE and UK 40. Panel information: USA 41. About the authors and Analysys Mason 42. About the authors 43. About Analysys Mason 44. Research from Analysys Mason 45. Consulting from Analysys Mason
5 List of figures Figure 1: Geographical coverage of our Connected Consumer Survey 2015 Figure 2: Main reasons for churn cited by respondents who said they intended to churn in the next 6 months, by age group, Europe and the USA Figure 3: Mobile customers intention to churn by fixed mobile service combinations, Europe and the USA Figure 4: Mobile customers intention to churn by fixed mobile service combinations, Spain and the USA Figure 5: Net Promoter Score by mobile data allowance Figure 6: Intention to churn within 6 months, by proportion of data allowance used Figure 7: Main reasons for churn cited by respondents who said they intended to churn in the next 6 months, by age group, Europe and the USA Figure 8: Percentage of respondents who cited a given reason for leaving their previous operator, by countries and region Figure 9: Net Promoter Score for mobile operators, selected countries Figure 10: Intention to churn by contract type, Europe and the USA, 2012 and 2014 Figure 11: Net Promoter Score by contract type, Europe and the USA, 2014 Figure 12: Mobile customers and intention to churn by fixed mobile service combinations, Europe and the USA Figure 13: Mobile customers and intention to churn by fixed mobile service combinations, Europe and the USA Figure 14: Intention to churn by service bundle, Spain and the USA Figure 15: Percentage of respondents who selected more data or minutes as an important factor in choice of mobile tariff, by age group, Europe and the USA, 2012 and 2014 Figure 16: Respondents by size of monthly voice minute and data allowances, 2012 and 2014 Figure 17: Respondents that identified the price of mobile data, relative to that of voice and messaging, as important when selecting their current provider, APAC and MEA countries Figure 18: NPS and average mobile spend per month by data allowance, Europe and the USA Figure 19: Mobile data allowances by usage, Europe and the USA Figure 20: Intention to churn within 6 months, by proportion of data allowance used Figure 21: Intention to churn because of speed and OTT video consumption by age, Europe and the USA Figure 22: Intention to churn because of speed, by country Figure 23: NPS for respondents with 3G or 4G service Figure 24: Use of Wi-Fi and Wi-Fi hotspots, by cellular technology generation Figure 25: Intention to churn because of poor network coverage, by country
France Germany Poland Spain Turkey UK USA Indonesia Malaysia South Korea Morocco Qatar Saudi Arabia South Africa UAE The Connected Consumer Survey 2015: mobile customer retention 14 Price dominated churn decisions in Europe and the USA, but other factors came into play in Asia Pacific and MEA About 63% of our survey respondents had changed mobile provider. The topthree reasons cited were as follows. Price: The most-commonly cited factor, price was more significant in Europe and the USA than in Asia Pacific or MEA. Poor customer service: This can be expensive and difficult to address, but up to 20% of respondents cited it. Poor coverage: This varied by country, but was particularly high in Indonesia, where coverage is unreliable because of the geography of the area. Reasons for churn varied significantly between countries outside Europe and the USA. For example: handset choice and access to value-added services were particularly important in South Korea; promotional offers and OTT partnerships featured heavily in Indonesia and Malaysia; and regularly changing operator is an established trend in some countries in MEA. Figure 8: Percentage of respondents who cited a given reason for leaving their previous operator, by countries and region [Source: Analysys Mason, 2015] Reason Europe and the USA Asia Pacific MEA Price 55% 46% 38% 51% 43% 40% 46% 19% 20% 14% 17% 18% 19% 22% 21% Poor customer service 17% 12% 9% 20% 10% 10% 7% 8% 10% 10% 13% 8% 16% 16% 11% Poor coverage 8% 9% 7% 6% 14% 16% 18% 27% 19% 8% 14% 10% 16% 10% 9% Handset choice Different package Poor data speed To join peers network 3% 2% 5% 6% 3% 6% 5% 1% 2% 16% 6% 4% 1% 4% 4% 3% 4% 5% 5% 8% 8% 5% 8% 6% 8% 7% 5% 4% 9% 6% 2% 3% 3% 2% 4% 2% 3% 20% 13% 5% 7% 10% 10% 8% 8% 2% 8% 17% 4% 8% 4% 4% 11% 10% 6% 10% 9% 6% 5% 4% Other 10% 14% 15% 8% 9% 14% 13% 6% 21% 33% 26% 37% 27% 27% 37% Question: What key factor motivated you to leave your previous mobile provider? ; n = 9635.
500MB or less >500MB to 1GB >1GB to 2GB >2GB to 5GB >5GB to 10GB >10GB to 20GB >20GB Unlimited Net Promoter Score The Connected Consumer Survey 2015: mobile customer retention 23 There is a correlation between higher data allowance and increased NPS, but our results emphasise the importance of value, not just size There was a correlation between data allowances and respondents likelihood to recommend their operator. As data allowances increase, so does willingness to recommend the service. This is largely because customers get better value as the cost per gigabyte of data decreases. However, the correlation is not simply linear, but rather there are distinct brackets of data allowance that achieve higher NPS than others. Respondents with 2GB to 5GB and 10GB to 20GB allowances awarded the highest NPS, while those with 0.5GB, 5GB to 10GB and more than 20GB awarded the lowest. These distinct brackets underline the importance of value over pure volume. There is a bias towards customers from the USA in the 5GB to 10GB band. These customers award low NPS, possibly because they pay high tariffs of an average of EUR76 per month, and distort the curve. Customers of Iliad in France distort the top of the curve. Iliad s 20GB allowance is aggressively priced (at EUR20 per month, or EUR16 if purchased as part of a bundle), and its customers in our panel gave it high NPS. Balancing price and allowances appeared to be the key in terms of attaining high NPS among our panel. Respondents with 10 20GB allowances awarded the highest NPS, and paid on average EUR32 per month for their service. Figure 18: NPS and average mobile spend per month by data allowance, Europe and the USA [Source: Analysys Mason, 2015] 20 15 10 5 0-5 Trend line Questions: How much mobile data is included in your mobile phone package per month? ; n = 5629; and On a scale of zero to ten, how likely is it that you would recommend your mobile phone service provider to a friend or colleague? ; n = 7052.
41 Executive summary Recommendations Key drivers of mobile customer churn Pricing structures and churn Data pricing and its impact on retention Mobile data speed and customer satisfaction Methodology and panel information About the authors and Analysys Mason
42 About the authors Patrick Rusby (Analyst) is the lead analyst for Analysys Mason s SME Strategies research programme, and contributes to the Mobile Services programme within the Consumer research practice. Patrick s areas of specialisation for SME strategies are SME technology trends and adoption, enterprise mobility, SaaS and IaaS services for SMEs and unified communications. Within Mobile Services, Patrick is focused on the MVNO market and churn-reduction strategies for operators. Patrick was previously a Research Manager for Knowledge Peers, a peer learning platform helping SME CxOs share best practice in finance, technology and telecoms. He holds a Master s degree in Contemporary British Politics from Goldsmiths College, University of London. Stephen Sale (Principal Analyst) is the lead analyst for Analysys Mason s Mobile Services and Next-Generation Services research programmes. His primary areas of specialisation include next-generation communication services, over-the-top (OTT) player strategies and mobile pricing. He also has extensive experience in analysing mobile operator strategies and forecasting mobile service markets. Before joining Analysys Mason in 2004, Stephen worked in the industry on areas that include VoIP, next-generation service architecture and broadband access. He has a degree in economics and an interdisciplinary MRes from the University of London.
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