amb 13 03-14 - rob van den dam - ibm

© 2014 IBM Corporation

Industry in transitionThe customer-activated telecom provider

IBV Institute for Business Value

13 March 2014

Rob van den DamGlobal Telecommunications Industry Leader IBM Institute for Business Value


IBM Institute for Business Value

The IBM Institute for Business Value (IBV) creates fact based thought leadership that help clients realize business value

FutureAgendas

Value RealizationStudies

3 to 10 year industry outlook with action oriented next steps

In-depth assessment of today’s critical issues, opportunities, etc

CXOSurveys

Chief Officiers studies – CEO, CIO, CMO, CFO, CHRO, etc.

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3

In addition, we conduct consumer surveys enabling us to compare views from the ‘supply’ side and the ‘demand’ side



4

28Middle East and Africa 30

Asia Pacific

Central and Eastern Europe

42Western Europe

47

Japan

20

North America

16

South America

35

The 2013 CxO study covers 4,183 face-to-face conversations with CxO’s in 70 countries – 218 of them from the Telecom industry

4

Telecommunications distribution

Source: Question E–Participant Country; Telecommunications n=218



5

Most telecom CxOs recognize they don’t understand their customers well today, but they expect to get much better on this in the future

5

High level of customer understanding

180% more

84%

30%

84%3–5 Years

30% Today

“It is key to lift the insight to customer behavior and upgrade the capability of quick responsiveness to customers’ demand.”

CEO, Telecommunications, China

Source: Question C1–How well do you understand your customers today?; Telecommunications n=208Question C8–How well do you think you will understand your customers in 3 to 5 years?; Telecommunications n=205



Many telecom CxOs recognize that customers already have a lot of influence on their organizations

6

32%

6%

63%

63%

influenced toa large extent

“The empowerment of the Consumer is generating more complexity. The mental model is changing. We are facing a major social transformation.”

CMO, Telecommunications, Brazil

Source: Question C4–How much influence do your customers have on your enterprise today?; Telecommunications n=207

Large extent

Some extent

Limited extent

Customer clout: customer influence on the enterprise



7

Close collaboration with customers is a clear ambition: nine out of ten Telecom CxOs foresee doing so in the near future

7

Telecommunications CxOs plan to collaborate much more extensively with customers

132% more

88%

38%

88%3–5 Years

38% Today

“We focus on increased collaboration with the customer to understand their needs and expectation.”

CMO, Telecommunications, Turkey

Source: Question B2–How strong is your collaboration with customers?; Telecommunications n=207



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Yet half of the telecommunications companies in our sample have a weak digital-physical strategy – or none at all

8

Source: Question B4–What kind of digital strategy does your enterprise have?; Telecommunications n=204

31%

19%

50%50%

have an integrated digital-physical

strategy

“We plan to ensure the customer is well understood, recognized and served from any channel and via any product: the 360 degree view of the customer (web, shop, call center, social network, etc.).”

CIO, Telecommunications, Russia

Integrated digital-physical strategy

Limited digital strategy

No digital strategy

Types of digital strategy



9

China (1265)

Australia (652)

Canada (594)

Belgium (323)

Brazil (671)

Denmark (319)

Egypt (343)

India (1038)

Finland (309)

Greece (738)

France (1343)

Germany(831)

Indonesia (735)

Ireland (351)

Mexico (658)

Italy (560)

Malaysia (506)

Japan (964)

Kenya (322)

Netherlands (548)

New Zealand (464)

Russia (1003)

Nigeria (550)

Poland (328)

Norway (303)

Philippines (877)

Saudi Arabia (306)

South Africa (649)

UAE (320)

Spain (809)

Turkey (533)

Sweden (354)

Thailand (616)

UK (657)

US (1083)

To understand the consumers’ point of view we surveyed - in Q4’13 / Q1’14 - close to 22,000 consumers in 35 countries

These countries account for 67% of the worlds population and 84% of global GDP



Electrical appliances

Holidays/vacations

Food & drinks

Clothing

10

Mobile Broadband

Transportation

Pay television

Utilities

Elect. Appliances

Holidays

Food & drinks

Clothing

Going out

Sports

Fixed Broadband

Mobile Phone usage

-4%

-7%

-7%

-8%

-10%

-14%

-15%

-16%

-18%

-18%

-19%

-25%

-32%

Mobile Telephony

Sports

Going out

Mobile broadband

Net Decrease / Increase

Pay television

Fixed Telephony

Transportation

Fixed Broadband

Utilities

Net Decrease / Increase

Fixed Telephony

Source: 2014 IBM Global Telecom Consumer Survey, 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?

-15%average

20%

18%

14%

14%

11%

10%

3%

3%

2%

-6%

-9%

-13%

-6%

Consumer sentiment in the Netherlands is extremely negative, also for spending on telecommunications

+5%global

average



91%

48%

82%82%

74%

54%

63%

25%

45% 44%

33%36%

27%

13%

21%

10%

16%

31%

14%

7%

Inst

an

t Me

ssa

gin

g /

CH

AT

EM

AIL

SO

CIA

LN

ET

WO

RK

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INT

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ad

MO

BIL

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alls

MO

BIL

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ess

ag

ing

(SM

S, M

MS

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MIC

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Vo

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ove

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Generation below 25

Generation above 25

11

of generation below 25 use Instant Messaging/Chat daily to communicate with others

91%

Source: 2014 IBM Global Telecom Consumer Survey, How often do you use each of the following communications services?

Daily usage

Instant messaging and Social Networking have become key channels to communicate with others



12

37%

21%

37%

5%

SignificantlyReduce(d)

ModeratelyReduce(d)

Increase(d)

NoChange

of respondent said they have reduced – or will reduce – SMS usage by increasingly using alternative messaging channels

58%

15%

22%

58%

5%

SignificantlyReduce(d)

ModeratelyReduce(d)

Increase(d)

NoChange

of respondent said they have reduced – or will reduce – traditional voice calling by increasingly using alternative voice channels

37%

SMS USAGE Traditional VOICE CALLING

Source: 2014 IBM Global Telecom Consumer Survey, To what extent have you reduced – or will you reduce - the following by using alternative channels?

Because of these new OTT channels, many respondents said they ‘ve decreased - or will decrease - spending on traditional communications



13

15% 16% 68%

13% 19% 68%

13% 19% 68%

26% 27% 47%

30% 28% 43%

41% 28% 31%

60% 22% 18%

57% 30% 13%MOBILE PHONE

LAPTOP / NETBOOK

Desktop PC

TABLET

Internet-enabled TV

OTHER (e.g. Internet-enabled Blu ray player)

GAME CONSOLE withInternet connection

eReader

Very Valuable Moderately valuable Little valuable / Not applicable

of respondents identifies the mobile phone as the most valuable device

57%

Source: 2014 IBM Global Telecom Consumer Survey, How VALUABLE are the following devices for you to access the Internet?

How valuable is each of the following devices for you to access the Internet?

The mobile phone has become one of the most valuable devices to access the Internet



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51% 49%

58% 42%

63% 37%

70% 30%

74% 26%

75% 25%

77% 23%

79% 21%

80% 20%

81% 19%

83% 17%

83% 17%

83% 17%

84% 16%

86% 14%

86% 14%Track usage & get detailed bills

Pay bills & recharge accounts

Status checks

Contact history

Information on buy products

Dealer/retail store location enquiries

Set alerts & limits

Know outstanding bills/amounts

Get offers customized for you

Change administrative information

Info on comms products/services

Know current plan / change it

Registration

Start/stop subscription services

Best plan based on your usage pattern

Raise service issues & track them

Self Service Human interaction (live agent)

Source: 2014 IBM Global Telecom Consumer Survey, Please indicate your preference for either self service or human interference (live agent)?

In the Netherlands, for the vast majority of touchpoints, customers increasingly prefer to help themselves



15

5%

6%

7%

8%

10%

11%

31%

32%IMPROVEMENT CUSTOMER CARE

IMPROVEMENT EXISTINGProduct/Service

DEVELOPMENT NEW Product/Service

FEEDBACK on COMMUNICATION tomarket

FEEDBACK on Overall STRATEGY

DEVELOPMENT of New CAMPAIGN

IMPROVEMENT of Existing CAMPAIGN

Other

57%

43%

Like to interact

with their provider

to help them to

improve

of respondents like to interact with their provider on improving customer care

32%

Source: 2014 IBM Global Telecom Consumer Survey, On which topics do you want to communicate with your Telecom Provider to help the organization toimprove?

Notinterested

Topics customers are prepared to communicate on with their provider

In addition, the majority of respondents said they are willing to provide feedback or engage with the telecom provider to help them to improve



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5% 20%

6% 24%

8% 32%

11% 36%

17% 43%My Telecom Provider allows me MULTIPLEWAYS to interact and communicate with them

My Telecom Provider USES THE INFORMATIONit already has about me rather than asking me to

provide it repeatedly

My Telecom provider LISTENS TO ME andcollects the right amount of information to meet

my communication needs

My Telecom Provider enables me to provideFEEDBACK or to provide input to develop new

communication products and services

My Telecom Provider uses SOCIAL MEDIA in aneffective way to engage with me

Strongly agree Moderately agree

of respondents agree that CSPs use Social Media in an effective way to engage with them

Only

25%

Source: 2014 IBM Global Telecom Consumer Survey, Indicate to which agree/disagree with the following statements on your Primary Telecom provider?

But telecom providers don’t yet get social, only a quarter of consumers feel their provider uses social media effectively to engage with them

How good is your primary telecom provider in interacting with you?



17

5% 45% 50%

6% 48% 46%

7% 52% 40%

9% 56% 34%

14% 57% 29%

8% 65% 27%

22% 57% 22%

14% 68% 18%

10% 74% 16%

26% 60% 14%

30% 58% 11%

37% 53% 10%My Bank

Health care organizations

My Insurance Company

My primary TELECOM PROVIDER

My electric/gas utility provider

Government, including local authorities

My Pay-TV provider

My Grocery Retailer

Physical Retail Stores

Online stores (e.g. eBay)

Internet Information Providers (e.g. Google)

Social Networking sites

Most Trusted Moderately Trusted Least Trusted

Source: 2014 IBM Global Telecom Consumer Survey, Who do you rust most to manage your personal information or manage your privacy?

of respondents trust CSPs to some degree – but only 10% to high degree - to manage their data and privacy

84%Who do you trust most to manage your personal information/privacy

With respect to trust to manage private/personal information, Dutch CSPs score rather well in comparison to other providers

4



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6% 22% 43% 13% 16%

46% 22% 25% 3%4%

28% 18% 34% 15% 5%

33% 31% 29% 4%3%

36% 30% 28% 3%3%

29% 30% 33% 5%3%

32% 29% 31% 3%5%I like to be INFORMED about the personal informationtelecom provider GATHERS and stores

I like to RESTRICT the personal information telecomprovider are allowed to GATHER and store

I like to be INFORMED about what telecom provider isDOING with personal information

I Like to RESTRICT what telecom provider can DO withpersonal information

I HAVE a PROBLEM when provider shares personalinformation with THIRD PARTIES

I like to BE ASKED to give permission for the personalinformation that provider can share with THIRD

PARTIESIn this INTERNET AGE, I expect to have to disclose

personal information in order to get personalizedservices

Strongly Agree Mod. Agree

Mod. Disagree Strongly Disagree

Source: 2014 IBM Global Telecom Consumer Survey, To what extetnt do you agree with the following statements?

of respondents like to be asked to give permission to share personal information with 3rd parties

68%

Even in this Internet of age, people like to be in control, and to be informed, on the personal data CSPs gather and what they do with it



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14%

8%

14%

16%

17%

19%

36%

35%

28%

51%

36%

60%

64%

76%

Internet search

Recommendationsfriends/family

Social Media

CSP websites

Retail stores

Traditionaladvertising

CSP emails &promotional offers

Above 25

Below 25

Source: 2014 IBM Global Telecom Consumer Survey, What are your preferred sources of information when you are evaluating telecom providers and their products/services?

of under 25s access Social Media to evaluate telecom providers and their products /services

51%

Sources of information on telecom providers and their products/services

Internet search, Friends/Family and Social Media are now the preferred sources of information when evaluating CSPs & their products/services



20

8% 57% 35%

12% 38% 50%

12% 42% 47%

12% 55% 33%

21% 58% 20%

24% 55% 21%

25% 62% 13%

28% 53% 19%

33% 51% 16%

33% 56% 11%Would TELL OTHERS about the bad experience

START considering COMPETITIVE services from other providers

Would DISCOURAGE OTHERS to use this provider

Would COMPLAIN to my telecom provider

Would STOP making PURCHASING from my provider

Would use the services of my provider LESS FREQUENTLY

Would NEVER USE my telecom provider again

Would post a NEGATIVE REVIEW or comment ONLINE

Would COMPLAIN on SOCIAL MEDIA

NO CHANGE in behavior

Always/Often Regularly/Possibly/Sometimes Never

Source: 2014 IBM Global Telecom Consumer Survey, What would you do in case of a NEGATIVE expereince with your telecom provider?

Indeed, after a NEGATIVE experience, consumers are likely to tell others, discourage them to use the provider, but don’t complain to their provider

of respondents will tell others – always or often – about

NEGATIVE experiences33% Responses in case of negative experiences



21

40% 38%

35%

16%16%

13%

5%

Believecontacting willNOT MAKE

ANYDIFFERENCE

Have to WAITTOO LONG inthe queue tospeak to callcenter agent

TOO MUCHHASSLE to get

through tocustomerservice

NETWORKSUNRELIABLE

so alwaysexpect serviceto be variable

Customerservice NOT

COMPETENTto solve myproblems

My providerCHARGES for

calls to callcenter

Don't knowhow to contact

serviceprovider

Source: 2014 IBM Global Telecom Consumer Survey, If you not complain to your provider in case of a negative experience, what is the reason?

of respondents say they never complain to their provider in case of a negative experience because they believe it will not make any difference

40%Reasons of not complaining

in case negative experiences

If they are not complaining to their provider, the main reasons are they believe it makes no difference, have to wait too long or it’s too much hassle



22

16%

18%

20%

23%

26%

32%

41%

44%BEFORE BUYING when the provider provides information

When contacting my provider for RESOLVING AN ISSUE

BEFORE CONSIDERING the telecom provider(REPUTATION)

On first purchase or BEGINNING OF SERVICE

Close to the END OF SUBSCRIPTION period

When I CONSIDER SWITCHING to a competitor

On receiving FIRST INVOICE

When my provider PROACTIVELY ask for my experience

Source: 2014 IBM Global Telecom Consumer Survey, What are the key moments in interacting with your telecom provider that matters to you?

For one third of respondents, word-of-mouth reputation is key before even considering buying from a telecom provider

of respondents say word-of-mouth reputation of the telecom provider is key before even considering the telecom provider for buying products/services32%

Key moments of interaction that matter



Two-out-of-five consumers will not buy/subscribe from a telecom provider because of discouragement by friends and family

23

7%

25%

29%

37%

39%

46%

53%

54%POOR CUSTOMER SERVICE / experience inthe past

UNCLEAR service OFFER or expectationsetting

NOT GETTING ANSWERS to key questions

DISCOURAGEMENT FROM FRIENDS basedon experience

Too COMPLICATED sign up or PURCHASEPROCESS

REVIEW/RATINGS on experience from othercustomers

Not able to interact via CHANNEL OF MYCHOICE

Other

will NOT BUY/ subscribe from a telecom provider because of discouragement by friends and family

39%

of respondents will NOT BUY/ subscribe from a telecom provider - or ABANDON a purchase - because of poor service/experience in the past54% Reasons not to buy/subscribe

from a telecom provider

Source: 2014 IBM Global Telecom Consumer Survey, Which of the following REASONS will cause you NOT to buy/subscribe from a telecom provider or to ABANDON a purchase



24

6%

6%

16%

20%

21%

23%

32%

35%

43%

67%Providing HIGH QUALITY/compelling products/services

Resolving issues FAIRLY

Giving QUICK effective responses to questions/issues

LOW PRICES even at the cost of quality/service

Giving EXCLUSIVE offers (loyalty program)

Providing TRANSPARENCY & openness

PERSONALIZED & consistent service

ENABLING CUSTOMIZATION of products/services

SEEKING OPINION to develop product/services

PROACTIVELY trying to improve user experience

Source: 2014 IBM Global Telecom Consumer Survey, What are the most important aspects for you to STAY LOYAL to your telecom provider?

Providing high quality and compelling products/services is the most important aspect in creating loyal customers

of all respondents say that getting high quality and compelling products/ services is key for them to stay loyal67%

Most important aspects to stay loyal(all Dutch respondents)



Advocates

25 Source: 2014 IBM Global Telecom Consumer Survey, What are the most important aspects for you to STAY LOYAL to your telecom provider?

2%

8%

18%

29%

21%

21%

27%

53%

58%

79%Providing HIGH QUALITY/compelling products/services

Resolving issues FAIRLY

Giving QUICK effective responses to questions/issues

LOW PRICES even at the cost of quality/service

Giving EXCLUSIVE offers (loyalty program)

Providing TRANSPARENCY & openness

PERSONALIZED & consistent service

ENABLING CUSTOMIZATION of products/services

SEEKING OPINION to develop product/services

PROACTIVELY trying to improve user experience

of advocates say that getting high Quality/Compelling Products is key for them to stay loyal77%

Most important aspects to stay loyal (for advocates)

Advocates seems to give even higher importance to compelling products, resolving issues ‘fairly’ and getting quick responses



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Customer advocacy is very low in the telecommunications industry. The Netherlands score low with only 17% advocates

Source: 2014 IBM Global Telecom Consumer Survey, Which of the following Loyalty statements Recommendation, buying, staying intent about your provider do you agree/disagree with?

36%37%40%46%

19%27%

39%

28%34%

40%40%47%46%

52%

35%

45%51%

46%52%56%

44%44%48%53%52%54%

31%37%

56%63%

44%47%

36%35%33%

27%

55%46%

37%

49%43%

39%39%34%

28%

47%

37%31%36%

30%27%

39%38%35%

31%32%31%

55%49%

30%24%

44%41%

28%28%27%27%26%26%24%23%23%21% 20%20%19%19%19%18%18%18%17%17%17%16%15%15%14%14%14%13%12%12%

32%

21% 21%

0%

20%

40%

60%

80%

100%

So

uth

Afr

ica

Ge

rma

ny

Ru

ssia

De

nm

ark

Eg

ypt

Ind

ia

Me

xico

Ph

ilip

pin

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Tu

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y

Fin

lan

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Ind

on

esi

a

No

rwa

y

Po

lan

d

Sw

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en

Ch

ina

Be

lgiu

m

US

Italy

Ne

w Z

ea

lan

d

Au

stra

lia

Fra

nce

Gre

ece

Ne

the

rla

nd

s

Ire

lan

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Bra

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UK

Sa

ud

i Ara

bia

Ma

lays

ia

Sp

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Ca

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da

Th

aila

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UA

E

Antagonists Apathetics Advocates



CSPs, indeed, are not leaders by any customer measure, and have a lot to improve

27

Customer Service No CSPs in Top 25No CSPs in Top 25

Net Promoter Score Telecom lowest among 7 industry groupsTelecom lowest among 7 industry groups

Customer Loyalty No CSP in Top 50No CSP in Top 50

Customer Simplicity No CSPs in Top 50No CSPs in Top 50

Customer Experience No CSP in Top 100No CSP in Top 100

Customer Satisfaction Wireless industry ranked 44 of 50 industriesWireless industry ranked 44 of 50 industries

Innovation No CSP in Top 50No CSP in Top 50

Only one CSP in Top 100, O2 at #46Only one CSP in Top 100, O2 at #46Retail Experience

GlobalGlobalUSUS



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Thank you

Rob van den Dam Global Telecom Industry Leader

IBM Institute for Business [email protected]

www.ibm.com/iibv

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