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Buying Process for Fixed Broadband Product Case Study : Telkom Speedy

Dhata Praditya

PT. Telekomunikasi Indonesia, Tbk.

Bandung, 4 Des ‘13

International Seminar & Conference on Learning Organization

2 RESEARCH

3 RESULT

1 INTRODUCTION

OUTLINE

4 CONCLUSION AND DISCUSSION

3

O N T E N T C

1 INTRODUCTION

Speedy is a brand of Internet access service end-to-end for use in residential or small and medium business sized. This service guarantees high speed data access according to internet package with access speed options ranging from 384 kbps to 3 Mbps per line.

DSLAM / GPON

Source : SPIRE Sep 2013

Market Share (FBB) - Nasional

LIS Growth

Market Growth

FBB 35,7%

Market Share (FBB) - Jabodetabek

TOTAL BROADBAND NASIONAL FIXED BROADBAND NASIONAL

Mobile Broadband; 14.002.327 ;

85%

Speedy; 2.131.257 ;

13%

Fastnet; 217.563 ; 1%

Others Fixed;

64.020 ; 1%

Ytd Sep 2012

Market Growth TOTAL

55%

Mobile Broadband; 22.208.311

; 87,4%

Speedy; 2.893.965 ;

11,4%

Fastnet; 246.903 ;

1,0%

Others Fixed;

58.343 ; 0,2%

Ytd Sep 2013

Speedy; 2.131.257 ;

88%

Fastnet; 217.563 ;

9%

Others Fixed;

64.020 ; 3%

Ytd Sep 2012

Market Growth

FBB

32,6%

Speedy; 2.893.965 ;

90% Fastnet; 246.903 ;

8%

Others Fixed;

58.343 ; 2%

Ytd Sep 2013

90,46%

7,72%

1,52%

0,30%

Speedy

Fastnet

Biznet

Others

-5,2%

13,5%

-24,%

72,61%

22,55%

4,65%

0,19%

Speedy

Fastnet

Biznet

Others

-5,1%

11,4%

-35% LIS Growth

Market Growth

FBB 28,04%

7

O N T E N T C

2 RESEARCH

The buying process is the set of steps that a customer chooses to go through with the goal of satisfying a need. (Hudadoff, Pamela. 2009). The consumer decision making is triggered by the recognition of a problem or arousal of a need, followed by search for information, then consumer follows evaluation of alternatives and goes with purchasing the alternatives which are attractive, and in post purchase, consumer experience product and outcome may be satisfaction or dissatisfaction. (Blackwell et al., 1995)(Tamboli, Sajid 2008)

Awareness /

Understanding Interest Trial Accept & Buy

Use &

Satisfaction

• How well do the different channels create awareness of Speedy

• Are there sufficient marketing initiatives?

• Does the product capture my attention?

• Is it competitive versus similar offerings?

• How can I try Speedy?

• Does the trial experience convince me to buy?

• How easy is the order process?

• How satisfying is the installation?

• Service quality & user experience?

• Am I satisfied in the long-term?

Need Recognition & Problem Awareness

Information Search Evaluation of Alternatives

Purchase Post Purchase

Evaluation

Blackwell et al., 1995

• Go-to-Market Research

• Operational Assessment

Buying Process

Analysis On Progress

Buying Process

Modelling

Speedy Revitalization Program - GTP Assignment in TELKOM

Broadband Division - Implementation Phase in 2 selected

areas

11

O N T E N T C

3 RESULT

Channels to create awareness and understanding of Speedy

Limited display and demonstration of Speedy in Plasa Telkom

No product differentiation across fibre or ADSL

Only standalone product available via inbound sales; no

bundles

Brochure available on the pricing in the shop

• Brochure focused on pricing by speed and not on the quality of ADSL/fibre broadband (e.g: dedicated connection to ensure speed)

• A simple standee on Speedy at the Plasa does not communicate as well as a live demo

Speedy Regular

Broadband internet access for family starting from 384kbps to 100Mbps

Speedy Instan

A Pay-as-You-Use offering that allow non-customer to access through prepaid

Speedy Gold

SME broadband

Speedy 3 main products listed on the website

• Not focusing on superior quality and experience of fibre broadband

• No product categorization by quality

147

1

3

2

4

6

5

Telkom Flexi

Speedy

Fixed phone

Delima & Content

Indonesia Wi-Fi

• Could not obtain info regarding bundle on inbound call

• To subscribe to USeeTV you need to have Speedy

Trial Accept/Buy Use Awareness Interest

UseeTV

As a key channel to create awareness and understanding of the product, more attention should be paid to communication product value and providing relevant information

Speedy Websites


• Only brief available product info

• No link to Telkom Speedy website where more info on pricing, package are available

• Wordy, non-visual design fails to capture reader attention

• Hard to appreciate product

• Only standard pricing on the website, no promotions.

• No bundle package or pricing available

Product Description Design Pricing

Speedy promotional price analysis

First Media offer described here is based on offer before July-2013

1. Speedy maintains the same

bandwidth at a reduce price

2. First Media strategy focuses

on higher bandwidth. Price

remains the same but they

upgraded 1.5Mbps 4Mbps

and introduced a 30Mbps

offering

3. Speedy Promotional Price is

still not as attractive as First

Media


195 295

645

995

1.695

60 195 235

350

695

350

695

2035

0

500

1000

1500

2000

2500

384K 512K 1M 1.5M 2M 3M 4M 6M 8M 12M 30M

Bandwidth

Price (Rp 000/ month)

Speedy Standard offer

Fastnet Home & Kid offer

Speedy Promotional

Price

30M offer is newly introduced

Product / Pricing Strategies

MBB providers continue to have an edge in pricing and speed offer

Plans Quota

(GB) Speed

Price

(Rp,000)

Broom 100 2 1M 100

Broom150 3 1M 150

Broom200 5 2M 200

Broom quota

100 2.5 7.2M 100

Broom quota

200 6 7.2M 200

Plans Quota (MB)

Speed Price

(Rp, 000)

XL99 3,600 7.2M 99

XL49 1,500 7.2M 49

XL25 600 7.2M 25

Plans FUP Speed Price

(Rp,000)

Super pro 500M/day 14.7 275

Super

advance 500M/day 3.1 150

Basic 500M/day 768K 90

Speedy 1st

month 2nd -12th month

Tariff

Speedy 384 Pro-rata 99k 195k

Speedy 512 Pro-rata 125k 295k

Speedy 1Mbps Pro-rata 295k 645k

Speedy 2Mbps Pro-rata 455k 995k

Speedy 3Mbps Pro-rata 645K 1695k

Trial Accept/Buy Churn Awareness Interest

Speedy Comparison

http://www.xl.co.id/Splash.aspx

Multiple, area-specific promotions

Speedy 1st


Tariff

Speedy 384 pro-rata 99k 195k


Speedy 1Mbps pro-rata 295k 645k


Speedy 3Mbps pro-rata 995K 1695k

Community pricing

Speedy 1st


Tariff





Acquisition pricing

Speedy 1st -6th month

7th 30th month

Speedy 384 50k 99k

Speedy 512 99k 125k

Low occupancy

pricing

1

2

3

1. Multiple pricing for the same product leads to dissatisfaction among subscribers not offered the promotional pricing

2. Difficult for Telkom to refuse customer requesting for similar promotional price

3. ‘Below the line’ promotion: narrow effect on awareness & interest


Speedy 1st month 2nd -12th month

Standard Tariff

Speedy 384kbps pro-rata 99k 195k

Speedy 512kbps pro-rata 125k 295k




Speedy latest promotional pricing

User Reaction Promotions

Many schemes, no loyalty management

PayTV bundle comparison: Telkom, First Media

• Currently only low-speed bundle available (512kbps and 1Mbps) for Indihome, therefore not very attractive to subscribers

• Competitiveness of Indihome bundle:

• Price: Slightly cheaper but not compelling enough to influence a switch for First Media’s subscriber

• Broadband Speed: Not superior to First Media

• TV: Fewer channels and lack of HD

• VAS: Free POTS at certain time may attract a certain segment. Storage and Melon may not be perceive to be of high value due to availability of free OTT offerings

Not available yet

Indihome ‘Gold’ First Media Combo pack

FBB: 2Mbps TV: 51 ch + 1 mini pack Price: Rp 320K

POTS: Free calls from 20:00 – 06:00 VAS: • 100MB storage • Melon • 12 mth anti-virus

FBB: 2Mbps TV: 56 SD and 12 HD channels Price: Rp 280K






Telkom launched Indihome bundle to compete with First Media Combo Package

First Media offerings before July-2013

Wi-Fi Hotspot

1. Service availability is not communicated on the offer to the subscriber

• Not actively promoted to be part of the VAS in the bundles offerings

2. No info on available hotspot locations (no map on availability

3. Login using Speedy ID is cumbersome

4. issues that need to be solved:

• User will be log out every 60 mins

• 30% hotspot not working


Issues of awareness & use Promotion

Major element of FBB offer is semi-mobility from Wi-Fi

• Speed: Only available for 512kbps

• Price: Could cannibalized subscription of Speedy (30 days of Speedy Instan is Rp 150k against subscription at Rp 125k)

• Conversion: No proactive up-sell to convert Speedy Instan Speedy subscription

Aims to be a trial mechanism to encourage adoption of Fixed Broadband for pre-wire users

Speedy Instan: Pre-paid service

Speedy 1st month 2nd – 12th month

Standard Tariff






Speedy latest promotional pricing


Issues Available to non-Speedy Subscribers

Needs to be an effective broadband trial service with good up-sell to post-paid

10%

1%

51,370 7,291 44,079

Call Offered Abandon ACD Call 4,342 3,855 1,677

Promo Sales PS

656 592 235

UCS-R2

UCS-R3

89% 44%

17%

86%

90% 40%

Service Provisioning Performance

Gap exists in both Jakarta Timur and Selatan High drop in take up between Sales Put-to-Sales

• Issues such as long lead time in service activation lead to only low number of subscribers finally taking the service

• Long time for service provisioning could be attributed to:

• Drop wire performed by another party therefore it takes one day to confirm availability to the engineer performing installation

• Password activation takes more than 1 hour. Engineer comes back another day leading to delay

• Situation seems to be more severe in Jakarta Timur

• Some other reason raised :

• Availability of modem

Source: IBC147 Mar-2013

Source: IBC147 Apr


44% 60%

0

100

200

300

400

500

600

700

800Sales

Hierarchy of Churn reasons (100%) Reasons for Customer Churn

Source: Telkom

1. Unable to actively diagnose the network to predict churn

2. No customized special offer to retain customer expressing churn intention

3. No loyalty reward

4. No ‘win back’ strategy (e.g pre-wire fallback)

Churn management


Efficiencies

37%

Connection

21%

Competitor

16%

Expensive

13%

No Interest

8%

Moved

5%

Leave Speedy (95%)

Move location (5%)

Connection problem

Competition Expensive

Connection unreliable

Faulty modem

Other FBB

Other MBB

Efficiencies (combination

of reason)

Not interested

O N T E N T C

4 CONCLUSION & DISCUSSION

Buying Process: Gap Analysis

Awareness & Understand

Interest Trial Accept & Buy Use & Enjoy

Understanding of high bandwidth subscription

Inefficient channels In Plasa shop, Speedy’s value

proposition not well communicated and no live demo.

Brochure on Speedy is simple without much description. No brochure on bundled offerings.

Web site navigation is poor and does not present information clearly.

Low bandwidth offerings starting at 384kbps

Bundle: POTS + Speedy (N/A) Triple-play (not as

attractive compared to First Media and late to market)

Quad-play (N/A)

Pricing: Nationwide promotional

pricing still expensive Localized promo create

confusion as not open to all

Wi-Fi VAS: No info on Wi-Fi hotspot

location 30% of Wi-Fi hotspot not

working

Pre-wire trial only available for 1 month (at 512kbps). Unable to truly experience benefit of broadband

No proactive calls to convert trial customers to paying customers

No trial available for regular Speedy services (1Mbps and above)

Service provisioning takes a long time compare to competitor (40% drop for Selantan. 38% drop for Timur). Speedy takes at least 3

days against competitor 1 day

drop wire installation causes delay

Need to wait at least 1 hour after modem install for password generation

Price still expensive No discount for loyal

customers

Competitor quality, branding and price

Install done in 1 day Perceive more stable

connection Aggressive pricing in

targeted area

Network problem Often attributed to modem

with long hours taken for restoration

No churn management for customer expressing churn. Just redirect to Plasa. No control of subs

cancelling and re-signing with better promotion

Recommendations

• Free upgrade to higher bandwidth is a must. However it requires wider coverage and infrastructure betterment.

• To encourage take-up, bundling product either double play with POTS or triple

play combine with IPTV and POTS should be offered. With 75% of Telkom subscribers on POTS only, this strategy could be a quick win to promote adoption. This could also helpful to prevent POTS revenue disruption.

• To different strategy approached to reduce churn rate: Prevention using prediction

tools and giving loyalty reward; Deflection using win back offer especially in high risk area.

• Improvement in website with dynamic and complete information. The website

could also use for advertising promo media with other social media. • Improvement in network database, and data integration inter-provisioning tools.

Thank

“Spirit lebih dahsyat dari strategi.” (Arief Yahya, CEO Telkom)

Jayalah Indonesia Jayalah Telkom Indonesia

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