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© 2012 IBM Corporation
Communications spending priorities, perceptions, expectations and attitudes of today’s smarter consumer
2011 Global Telecom Consumer Survey Country Data for South Africa
IBM Institute for Business Value
February 2012
© 2012 IBM Corporation
The digital revolution is changing the relationship between Communications Service Providers (CSPs) and their customers
It is a brand new game
Consumers become increasingly instrumented The are using technology to get information from a multitude of sources
Consumers become increasingly interconnected
They are connecting with each other to exchange information
Consumers become increasingly intelligent
They have clearly defined expectations of what they want
IBM Institute for Business Value
2
© 2012 IBM Corporation
It’s no wonder that
we know so much
Instrumented
The consumers are becoming smarter …….
1,97 billion Internet users
worldwide in 2010 - 14%
increase since previous year
255 million websites - 21.4
million added websites in ’10
Mobile technologies has
increased 92% globally and is
still more widely accepted in
the growth markets
Over 300,000 iPhone
applications
± 60,000 iPad applications
A mass of conver-
sations, based on two-
way communication,
often without the provider
involved
VIRAL PRODUCE
ON A LARGE
SCALE
FAST
TWO-WAY
COLLABORATIVE
CONSUME
BLOGS
VIDEO
SHARING
WIKI’s
FORUMS
Interconnected
In 2010
152 million blogs on the Internet
25 billion tweets sent on Twitter
250 million new people on Facebook
SN and Blog sites:
Total minutes increasing 82% YoY
Average time per person increasing 67% YoY
They have clearly
defined expectations
of what they want from
their provider now and
in the future
Todays consumers are
in control – and they
are driving changes
across the industry
Intelligent
IBM Institute for Business Value
3
© 2012 IBM Corporation
…….and now have new avenues to connect with each other and to influence large corporations, including CSPs
12/29/11 Press Release: “Starting January 15, a new $2 payment
convenience fee will be instituted for
customers who make single bill
payments online or by telephone”
Greetings,
I am disappointed to learn that Verizon Wireless
plans to institute a new $2 fee for paying bills
online…. Your company should not assume that
it can do anything to your customers and that we
will allow it to happen…
Within 24 hours, more
than 100,000 people had
signed a online petition:
12/30/11 Press Release:
“Verizon Wireless has decided it will not institute the
fee for online or telephone single payments that was
announced earlier this week.
The company made the decision in response to
customer feedback about the plan…”
IBM Institute for Business Value
4
© 2012 IBM Corporation
To evaluate the impact of the age of consumerism the IBM Institute for Business Value conducted both a Consumer ánd a CMO survey
5
IBM Global Consumer Survey
(25 countries;13,237 consumers)
IBM Global CMO Survey
(131 interviews with telecom CMOs)
IBM Institute for Business Value
© 2012 IBM Corporation 6
The vast majority of CSP CMOs believe connecting with customers, in particular through digital channels, will impact marketing most
Factors impacting marketing Percent of CSP CMOs selecting as “Top 5 Factors”
IBM Institute for Business Value
Data explosion
Social media
Growth of channel and device choices
Shifting consumer demographics
Financial constraints
Decreasing brand loyalty
Emerging market opportunities
ROI accountability
Customer collaboration and influence
Privacy considerations
Regulatory considerations
Global outsourcing
Corporate transparency
19%
65%
31%
69%
61%
51%
53%
16%
44%
51%
19%
11%
14%
39
%
53
%
38%
More
42
%
51
% 37
%
51
%
21%
More
36%
More
CSPs
CSPs CSPs
All
Industries
All
Industries
All
Industries
Source: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? (n=131)
No significant difference with ‘all industries’
Telecom (CSPs)
6
© 2012 IBM Corporation 7
50%
The vast majority of CSPs CMOs are underprepared to manage the impact of key changes in the marketing arena
Underpreparedness Percent of CMOs reporting underpreparedness
Data explosion
Social media
Growth of channel and device choices
Shifting consumer demographics
Financial constraints
Decreasing brand loyalty
Emerging market opportunities
ROI accountability
Customer collaboration and influence
Privacy considerations
Regulatory considerations
Source: Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years?
Global outsourcing
Corporate transparency
54%
71%
56%
78%
68%
62%
67%
52%
62%
64%
53%
47%
48%
50%
71%
68%
65%
63%
59%
57%
56%
56%
56%
55%
54%
50%
47%
Telecom (CSP) CMOs CMOs All industries
IBM Institute for Business Value
7
© 2012 IBM Corporation 8
And underpreparedness is in particular in the areas that are key for connecting to customers, identified as most critical for CSPs CMOs
Source: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? n1=131 Q8 How prepared
are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years?
Global outsourcing
Decreasing brand loyalty
Customer collaboration and influence
Growth of channel and device choices
Data explosion
Regulatory considerations
ROI accountability
Privacy considerations
Corporate transparency
Shifting consumer demographics
Social media
Financial constraints
Emerging market opportunities
Mean
5
6
7
8
9
10
11
12
13
1
2
3
4
11
50
60
70
40
20 40 60 0
Global Marketing Priority Matrix
Factors impacting
marketing Percent of CMOs selecting
as ‘Top five factors’
Underpreparedness Percent of CMOs reporting
underpreparedness
8 7
11 12
6
3
7
6
1
2 4
5
10 9
Telecom (CSPs)
IBM Institute for Business Value
8
© 2012 IBM Corporation
IBM conducted a survey of over 13,000 consumers in 25 countries in both the mature and emerging markets
9
Mature
France UK US
Greece Italy Japan
South Korea Australia Portugal
Netherlands Sweden Spain
Belgium Germany Canada
Emerging
Brazil
Mexico
Poland Czech Republic
India China
UAE
Russia
South Africa
B R I C
Cyprus
IBM Institute for Business Value
© 2012 IBM Corporation
The survey covered many topics, including spending priorities, service adoption trends, customer advocacy and adjacent market opportunities
10
Customer Spending
priorities for 2011 –
2013
Customers’ Adoption of,
Experience with, comms
products and services
Customer Sources of
Information for communi-
cation products/ services
Customers’ Attitudes
towards Comms Providers Customer Advocacy
and Antagonism
Adjacent Market
Opportunities
IBM Institute for Business Value
© 2012 IBM Corporation 11
More than 100 slides describe the characteristics of South African consumers in the context of telecommunications
Customer Spending
priorities for 2011 –
2013
Customers’ Adoption of,
Experience with, comms
products and services
Customer Sources of
Information for communi-
cation products/ services
Customers’ Attitudes
towards Comms Providers Customer Advocacy
and Antagonism
Adjacent Market
Opportunities
IBM Institute for Business Value
© 2012 IBM Corporation 12
1000 respondents were drawn from across South Africa and subscribe to at least one service from a number of selected service providers
Mobile/Wireless Broadband
Pay TV (Cable, Satellite, IPTV)
Internet Telephony
Fixed telephony (landline)
Mobile Telephony
Fixed Broadband (Cable, DSL, FTTx)-
*Services are
47 % 24 %
20 % 9 %
Proportion of sample identifying one of the providers
below as their Primary Communications Provider South Africa : 1000
respondents
IBM Institute for Business Value
© 2012 IBM Corporation
Gender, age and income distributions were selected such that they were representative for South Africa
13
Gender
Income Weighting
50% 50%
Above
50
11%
35-39
16%
40-49
19%
25-34
43%
Below
25
11%
Sample size was based on matching targeted
confidence level. The survey results were
weighted to achieve a geographical distribution
representative of:
o country population relative to population of
all countries combined
o consumer sample relative to country
population
Age
18%
35%
22%
7%
2%
15%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Under R
50,000
R 50,000 - R
99,999
R 100,000 -
R 249,999
R 25,000 - R
4,99,999
R 5,00,000 -
R 9,99,999
Over R 1
Million
IBM Institute for Business Value
© 2012 IBM Corporation 14
In our sample, Telkom had the highest proportion of OVER 40s customers, Vodacom has the highest proportion of BELOW 35s
11% 10%16%
8%
51%43%
41%
25%
16%
17%15%
14%
14% 23%
30%
7%1% 2% 6%
19%
5%9%
18%
0%
20%
40%
60%
80%
100%
Vodacom MTN Cell C Telkom
60 and above
50-60
40-49
35-39
25-34
Below 25
Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000
Age distribution across South African CSPs
IBM Institute for Business Value
© 2012 IBM Corporation 15
Some Results
IBM Institute for Business Value
© 2012 IBM Corporation
4%
-3%
-6%
-10%
-14%
-16%
-18%
-19%
-19%
-23%
-32%
-24%
Utilities
Food & drinks
Transportation
Mobile
broadband
Mobile Telepony
Pay television
Sports
Fixed Telephony
Clothing
Holiday/vacation
Electrical
appliances
Going out
Mobile Telephony
Mobile Broadband
Transportation
Pay television
Utilities
Elect. Appliances
Fixed Telephony
Holidays
Food & drinks
Clothing
Going out
Sports
53%
46%
24%
15%
11%
10%
4%
-3%
-3%
-5%
-10%
-22%
Utilities
Transportation
Food & drinks
Mobile Telephony
Mobile Broadband
Pay television
Fixed Telephony
Electrical appliances
Clothing
Sports
Holiday/vacation
Going out
Mobile Telephony
Mobile Broadband
Transportation
Pay television
Utilities
Elect. Appliances
Fixed Telephony.
Source: 2011 IBM Global Telecom Consumer Survey, Mature countries N= 8865: South Africa N = 1000:
Question: Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years?
Consumer sentiment on future spending in South Africa exceeds
Mature Markets by 25% Net Increase/Decrease Net Increase/Decrease
Holidays
Food & drinks
Clothing
Going out
Sports
Mature
average
-15%
average +10%
IBM Institute for Business Value
16
© 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000 S06 How often do you use the following communications services?
Mobile Telephony
Email/IM/Chat
Social Networking
VoIP
Video Streaming
Fixed Voice
83%
87%
90%
42%
24%
42%
Daily
Usage
ABOVE 25s
Mobile Telephony
Email/IM/Chat
Social Networking
VoIP
Video Streaming
Fixed Voice
89%
91%
80%
65%
25%
32%
UNDER 25s
2
3
5
1
4
6
1
2
3
5
4
6
90% of under 25s use
social networks daily
42% of under 25s with
Internet stream or
download video daily
17
Under 25s in South Africa communicate more using social networking than all other forms of communication; they also use landline less
IBM Institute for Business Value
© 2012 IBM Corporation 18
71%
55%
38%
11%
13%
11%
21%
21%
15%
33%
41%
68%
Mobile broadband
through phone
Fixed broadband
Mobile broadband
through laptop/
USB
Wireless hotspot
CONNECTIVITY services usage
ABOVE 25 UNDER 25
Q07 How often do you access the Internet via the following mechanisms?
For UNDER 25s with Internet access the mobile phone is the primary means to access media and content services
67%
55%
38%
8%
8%
13%
24%
19%
26%
31%
38%
73%
Fixed broadband
Mobile broadband
through phone
Mobile broadband
through laptop/
USB
Wireless hotspot
Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000
IBM Institute for Business Value
© 2012 IBM Corporation 19
One sixth of consumers said that they often cannot make mobile voice calls
36%
44%
29%
48%
40%
46%
16%
16%
26%
0% 20% 40% 60% 80% 100%
Mobile network
availability (Can make
voice calls)
Fixed Internet
connection availability
(Connection)
Mobile Internet
connection availability
(Connection)
Always Most of the time Sometimes/Never
AVAILABILITY of the Network as perceived by consumers
Q09a Please provide an indication of your experience of the frequency with which the following
communication services are available
Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000
Consumers’ perception might differ from what actual measurement indicate!
IBM Institute for Business Value
© 2012 IBM Corporation 20
Majority of South African automatically re-dial when they are disconnected but share such poor experience with friends / family
52%
30%
6%
43%
54%
62%
41%
29%
26%
5%
16%
17%
46%
65%
69%4%
21%
12%
Attempt to re-dial/re-connect
Avoid providers with whom friends/family had a
poor experience
Tell friends/family about my poor experience
Contact Customer Service
My Provider proactively contacts me in case of
poor network experience
Switch network providers - e.g. replacing SIM
Always Most/Sometimes Never
Q10. What happens when you are disconnected from a mobile, landline
or broadband during a voice call or when accessing the Internet?
What happens when being disconnected?
95% Attempt Redial/
Reconnect
83% Tell friends/family
about their poor
experience
84% Avoid Providers with
poor experience
Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000
IBM Institute for Business Value
© 2012 IBM Corporation 21
One third of all consumers surveyed think it is too much hassle to get through the Call Center
10%
24%
33%
24%
4%3% 3%0%
10%
20%
30%
40%
Telco
networks
unreliable,
variable
service
expected
Don't believe it
make any
difference
Too much
hassle to get
through to the
Call Centre
Have to wait
too long in
queue to
speak to Call
Centre
My Provider
charge for
calls to Call
Centre
My Provider is
unable to
resolve my
problems
Don’t know
how to contact
my Provider to
complain
Q12 Why do you not complain to your service provider when you are disconnected from
the network during a conversation, a voice call or internet session?
Reasons for NOT complaining
24% think that complaining doesn’t make any difference
and another 24% said they have to wait too long in
queue to speak to an employee of the Call Center
Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000
IBM Institute for Business Value
© 2012 IBM Corporation
72%
66%
58%
48%
41%
36%
35%
18%
63%
71%
78%
33%
29%
34%
37%
16%
Internet search
Recommendations/ advice
Social media
Websites of communication providers
Emails/ promotional offers
Traditional advertising
Retail stores
Shopping portals/ auctions
All Ages
Under 25s
What are you preferred sources of information when you are looking
for communication products and services?
Source: IBM Institute for Business value 2011 IBM Global Telecom Consumer Survey, South Africa N= 1000
Question: What are you preferred sources of information when you are looking for communication products and services?
Internet search, Family/Friends and Social Media have become
the preferred sources of information
22
IBM Institute for Business Value
© 2012 IBM Corporation 23
CSPs should focus on this new trend and mine digital channels, such as blogs, tweets, social networks and peer reviews
Blogs
Tweets
Peer
Reviews
Social
Networks
• Get in tune with today’s digital consumers
by listening to the digital dialogue
• Become part of the dialogue and to be
prepared to proactively respond to
negative chatter
• Encourage a two-way dialogue and
embrace customer input by building online
and offline communities
• Find the influencers, and target them with
appropriate messaging
By capturing viewer insights from social media sources, RTL
Nederland was able to gather timely feedback from viewers
on the television programmes 'X Factor' and 'So You Think
You Can Dance'. This helped the entertainment company to
better understand audience needs and preferences and
increase viewer satisfaction and involvement.
IBM Institute for Business Value
© 2012 IBM Corporation
Bharti Airtel understands how important it is to participate in the digital dialogue and how it can help solving problems
Source:http://www.buzzom.com/2011/07/airtel-adopts-social-media-strongly-customers-can-live-chat-in-facebook-and-orkut/
http://telecomtalk.info/airtel-impact-on-social-media/51645/
Having the official verified Twitter profile @Airtel_Presence,
they are scanning for every tweet which contains the word
“airtel” in it and giving appropriate replies to the customers and
solving the issues.
Airtel uses social network analysis to determine customers
facing problems. Any mention on social media is captured and
they get in touch with the customer to get the issue resolved.
“We take the business of customer satisfaction very
seriously.
Abhilasha
Hans,
CSO
IBM Institute for Business Value
24
© 2012 IBM Corporation 25
In a world where people
• are becoming increasingly informed, empowered
and demanding
• trust family, friends and peers more than their CSP
• have a wide range of providers to choose from
how can CSPs
Improve Customer Binding?
• What does a true Advocate look like?
• How valuable are they?
• Which elements of the customer experience are
most important to consumers?
• How well is the CSP positioned when it comes to
being focused on what the customer wants?
• How can providers use Advocacy to drive growth
and customer loyalty?
Key Questions
To establish a stable or growing market share, or to improve margins, CSPs should focus on customer binding
IBM Institute for Business Value
© 2012 IBM Corporation
A new approach for Customer Advocacy: Customer Focused Insight Quotient (CFiq)
The Net Promoter Score (NPS) is the traditional measure of word of mouth
advocacy. The score is calculated by simply asking consumers on a scale of 1 to
10 their likelihood to recommend a specific company or brand.
The IBM Customer Focused Insight Quotient (CFiq) utilize an approach that looks
at key client perceptions and organizes them in a manner that captures more than
demographic or behavioral data. Using statistical analysis and multiple regression
techniques it isolates predictive attributes that are highly correlated with positive
commercial behaviors. The CFiq measures the level of advocacy of a customer by
analyzing customer responses to three key statements as stated in the next slide.
CFiq categories: – Advocates: loyal clients who refer new business, consolidate more of their
portfolios with their primary provider, and resist competitive offers
– Antagonists harbor negative opinions about their provider, and potentially will
bad-mouth the company
– Apathetics: could be described as those who show no strong feelings either
way, and may be prime candidates to “sweeten” into advocacy. Or, they may
leave their firm if a more appealing option comes along.
NPS
CFiq
IBM Institute for Business Value
26
© 2012 IBM Corporation 27
A consumers’attitude is shaped by cumulative experience and directs future behavior and suggestions for improvement
Likelihood to Recommend A willingness to recommend one’s
primary provider to friends and family
Purchase Intent
AND A willingness to increase one’s
purchases if one’s primary provider
expanded its assortment and offered
products currently found only at other
providers
Staying Rate
AND
A willingness to stay with one’s primary
provider, even if other providers begin
offering competitive products or services
An Advocate is defined by three criteria
Antagonists Apathetics Advocates
Consumer Attitude
IBM Institute for Business Value
© 2012 IBM Corporation 28 28
Understanding who is an Advocate and who an Antagonist, and why, is important for driving growth and improving customer retention
“I have recommended my provider to several people”
“They have amazing customer service”
“They are more expensive but I hardly get disconnected or have calls dropped”
“I think my telco over-charges me but how can I prove it; my credit runs out too quickly after I top-up”
“The promotions lack any relevance to me”
“ I am looking to switch to the new provider offering cheaper rates”
Antagonists
Advocates
Apathetics
Higher Shareholder
Value
Lower Shareholder
Value
Advocates have a higher
wallet share and are highly
complimentary of the
provider capability
Apathetics are generally
passive participants
susceptible to competitor
offerings
Antagonists have low
wallet share and high
support costs and are
prone to bad-mouth the
provider
IBM Institute for Business Value
© 2012 IBM Corporation
South African CSPs score well with respect to the proportion of advocates (34%), but nearly half (49%) remain antagonists
Antagonists
60%
Advocates
18% Apathetics
22%
39%
49%53% 52%
62% 61%
49%
59% 58%55%
58%
46%
57% 60%64%
70%
52%
62%69% 71%
77%
41%
25%
17%
21% 23%
14% 16%
29%
20% 23%26%
23%
36%
25% 22%19%
14%
31%
25%
22%25%
19%
56%
36% 34%
26% 25% 24% 23% 22% 20% 19% 20% 19% 19% 17% 17% 17% 17% 16%13%
9%4% 4% 3%
0%
20%
40%
60%
80%
100%
Sw
ed
en
So
uth
Afr
ica
Fra
nce
Ru
ssia
Me
xic
o
Sp
ain
Gre
ece
Be
lgiu
m
UK
US
Ne
the
rla
nd
s
Cze
ch
Re
pu
blic
Ita
ly
Po
lan
d
Po
rtu
ga
l
Bra
zil
Ge
rma
ny
Ca
na
da
Au
str
alia
So
uth
Ko
rea
Ja
pa
n
Ch
ina
Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372
IBM Institute for Business Value
29
© 2012 IBM Corporation 30
CSPs do not account for the extreme gap in emotive attributes of their customer base
Advocates % strongly agree % strongly agree Antagonists
Give the CSP
credit for
doing
“everything”
right
Find
fault
with
“everything
” CSP
does
Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000
Offers me relevant products and services
37% 79%
Values me as a customer 32% 68%
Provide advice to improve my user experience 30% 63%
Resolves problems fairly 28% 60%
35% 67%
Listens and proactively follows-up on issues
32% 64%
Allows me to customize products and services
33% 65%
Displays consistent level of knowledge 37% 66%
Allows multiple ways to interact with them
54% 82%
21% 49%
34% 61%
Doesn’t request for existing information repeatedly 49% 76%
Listens and collects information necessary to meet
communication needs
Seeks input to develop new communication
Products/services
Prompt correction of errors when they occur
Gap
IBM Institute for Business Value
© 2012 IBM Corporation
The survey did uncover a number telecom-enabled services majority of consumers are willing to use /pay for
Retail/Shopping Banking/Insurance Healthcare
Public Services Travel & Transport
Nbr 1: Receive Mobile
coupons/Discounts (65%)
Nbr 1: Location-based
insurance claims (66%)
Nbr 1: Reminders for
medications/appointments (70%)
Nbr 1: Pay for local services
(e.g. car parking) (58%)
Nbr 1: Geolocalization (61%)
Utilities
Nbr 1: Alert when monthly usage
reaches pre-set threshold (69%)
Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000
#1
all c
onsum
ers
IBM Institute for Business Value
31
© 2012 IBM Corporation 32
IBM Confidential
IBM Institute for Business Value
February 2012
Robert Fox
Global Telecom Industry Leader
Global Business Services
Rob van den Dam
Global Telecom Industry Lead,
IBM Institute for Business Value
Contacts
WWW.IBM.COM/IIBV