multiplay services
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Winning and Losing in the Multi-play Market
Report sponsored by BT Wholesale Directed by Gareth Deere of Ipsos MORI
November 2006
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Key questions we aim to answer
Which multi-play services deliver the highest value to customers?
Which elements are most appealing to potential switchers?
How do I defend my customer base and acquire new customers?
Will my brand stretch across platforms?
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Methodology
635 consumer interviews
Fieldwork conducted in September 2006
All current end-users of multi-play services: that is they all have broadband internet, a mobile phone subscription, Digital TV in the household and a landline telephone subscription
The study was conducted online. Quotas were set to provide a national sample for our target audience
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Current average spend on multi-play services from any supplier
Current monthly spend on TV, broadband and
landline
Current monthly spend on TV,
broadband, landline and mobile
Sky TV Customers £72 £93
Orange/Wanadoo customer – mobile or broadband
£57 £77
BT Landline customers £58 £77
Cable customers – broadband, landline or TV; NTL, Telewest or Blueyonder
£57 £76
Overall average monthly spend
£56 £75
Base: all (635)
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Our choice model package components
Broadband speed16 Mbps (£20)8 Mbps (£10)2 Mbps (£5)Not part of bundle
Television packageAll digital channels including sports and movies (£40)All digital channels not including sports and movies (£20)Free channels only, not part of bundle
Landline telephoneFree calls anytime plus 25% off calls to mobiles (£20)Free calls evenings and weekends (£10)Not part of bundle
Mobile telephone500 anytime any network minutes plus 250 texts (£40)100 anytime any network minutes plus 50 texts (£20)Not part of bundle
ProviderCable: NTL/TelewestLandline/ISP: BTMobile/ISP: Orange/WanadooSatellite TV: SkyRetailer: TescoMobile operator: Vodafone
Bundle discounts10%20%30%
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Broadband a must have although speed not so important
No brand seems to own multi-play
Base: all (635)
Low
100 anytimeminutes, 50 texts
500 anytimeminutes, 250 texts
None
Free evening andweekend calls
Free anytime and25% off mobile calls
None
Free digitalchannels only
All digital channelsbut no sports or movies
All digital channels,sports and movies
None
2Mbps
8Mbps
16Mbps
None Vodafone
Tesco Sky
Orange
BT
NTL
High
Price 48% Broadband 22%
more preferable
less preferable
more important less importantTV 12% Landline 10% Provider 6% Mobile 2%
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For analysis we compare two packages
A. Base Package at £13.50 per month2 Mbps of broadband
Free digital channels only
Free evening and weekend calls
No mobile phone
No discount
B. Full package at £84 per month16 Mbps for broadband
All digital channels including sports, movies
Free anytime calls to landline and 25% off
mobile calls,
Mobile phone 500 anytime minutes with 250 texts
30% discount
Versus
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Not all about price, upgrade in service levels can drive value
% who would switch to multi-play offer from
one supplier
% who would stick with a la carte arrangements
Base Package at £13.50 per month2 Mbps of broadband, free digital channels only, free evening and weekend calls, no mobile phone, no discount
17% 83%
Full package at £84 per month16 Mbps for broadband, all digital channels, with sports and movies, free anytime and 25% off mobile calls, mobile phone 500 inclusive anytime minutes, 250 texts, 30% discount
47% 53%
Base: all (635)
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The impact of different elements…
Different elements added into base package (2 Mbps of broadband, free digital channels only, free evening and weekend calls, no mobile phone, no discount)
% who would switch
% difference compared to
base package
% who would stick with current
arrangements
Price – 30% discount on base package at £10.50
27% +10% 73%
TV – upgrade to all digital channels + sports and movies at £49.50
23% +6% 77%
Broadband – upgrade
to 16Mbps at £27
21% +4% 79%
Mobile Tariff – 500 inclusive call minutes and 250 texts per month at £49.50
20% +3% 80%
Landline – Free anytime inclusive minutes and 25% off calls to mobile at £22.50
17% 0% 83%
Base: all (635)
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Taking out broadband significantly reduces attractiveness of proposition
Full package but no broadband
% who would switch
% difference compared to full package
% who would stick with current
arrangementsNo broadband but all digital channels including sports and movies, free anytime landline calls and 25% off calls to mobiles, 500 inclusive mobile phone call minutes and 250 text messages, 30% discount – cost £70 per month
19% (-28%) 81%
Base: all (635)
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5541
48 52 51
4559
52 48 49
0%
20%
40%
60%
80%
100%
Skycustomers
Orangecustomers
BTcustomers
Cablecustomers
Vodafonecustomers
% who would bundle % who would stick with a la carte
Around a half would take out bundle offer in preference to a la carte arrangements
Full offer - £84 per month
12
25
512 11 8
30
3636 41 43
4559
52 48 49
0%
20%
40%
60%
80%
100%
Skycustomers
Orangecustomers
BTcustomers
Cablecustomers
Vodafonecustomers
% who would switch to package with current provider % who would switch to package with a different provider
% who would stick with current arrangements
Sky customers most likely to single source multi-play services, also most likely to stay with Sky
Full offer - £84 per month
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Loyalty Optimizer™ Framework
Loyalty Index and segments: First understand how loyal and valuable your customers are and which groups may offer either an opportunity or a threat
Loyalty diagnostics: Then understand what the key areas are that influence loyalty and value
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The Ipsos Loyalty Index combines attitude and behaviour to provide a robust measure of Loyalty
Behavioural Measures
Share of Behaviour
Number of Products Held
Attitudinal Measures
Brand Preference
Repurchase
We need BOTH
• Length of Relationship
• Recent Change in Behaviour
• Brand Preference
• Likelihood to Continue
• Length of Relationship
• Recent Change in Behaviour
• Brand Preference
• Likelihood to Continue
The Loyalty Index
Loyalty is a combination of attitude and behaviour
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The Loyalty Index & Loyalty/Value Segments
Loyalty Index
Val
ue
Loyalty Index and Value: key indicators for customer relationship strategies
Core Customers
Low Value ContentedCustomers
Low Value VulnerableCustomers
High Value VulnerableCustomersSegment size : 20% Segment size : 35%
Segment size : 15%Segment size : 30%
Value measures the total expenditure in the sector, for the considered brand
Median spend is used to determine high and low value
Our Loyalty Index is a composite indicator mixing past behaviour and attitudes
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Overall UK Broadband market Loyalty Score = 51
Loyalty Index
Val
ue
Core Customers
Low Value ContentedCustomers
Low Value VulnerableCustomers
High Value VulnerableCustomers
Segment size : 20% Segment size : 19%
Segment size : 29%Segment size : 33%
Two thirds of the UK broadband market are relatively low value, suggesting strong price competition
Loyalty segments – UK broadband market
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Three quarters of UK landline customers arehigh value, reflecting legacy of BT
Overall UK Landline market Loyalty Score = 52
Loyalty Index
Val
ue
Core Customers
Low Value ContentedCustomers
Low Value VulnerableCustomers
High Value VulnerableCustomers
Segment size : 36% Segment size : 39%
Segment size : 13%Segment size : 12%
Loyalty segments – UK Landline market
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Overall UK TV market Loyalty Score = 57
Loyalty Index
Val
ue
Core Customers
Low Value ContentedCustomers
Low Value VulnerableCustomers
High Value VulnerableCustomers
Segment size : 24% Segment size : 27%
Segment size : 24%Segment size : 25%
Loyalty segments – UK Digital TV market
Digital TV customers most loyal,reflecting lack of choice
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Roughly a quarter each segment for mobilephone, reflecting healthy competition
Overall UK Mobile market Loyalty Score = 51
Loyalty Index
Val
ue
Core Customers
Low Value ContentedCustomers
Low Value VulnerableCustomers
High Value VulnerableCustomers
Segment size : 27% Segment size : 23%
Segment size : 25%Segment size : 25%
Loyalty segments – UK Mobile phone market
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Now that we understand the customer base in terms of loyalty and value AND we understand who can and cannot be moved we look at how to influence these
The key dimensions of loyalty are:
We can look at how important each area is in driving loyalty and disloyalty
Loyalty diagnostics: Understanding what drives loyalty
RelationshipRelationship ExperienceExperience OfferOffer BrandProminence
BrandProminence PricePrice
Best InterestsThey feel like a friend
Treats FairlyI trust [BRAND] and believe they will treat me fairly
QualityThis [CATEGORY] offers consistent quality.
SatisfactionOverall how satisfied are you with [BRAND].
Relevance THIS [CATEGORY] is appropriate and fits my lifestyle and needs
Differentiation[BRAND] has unique or different features or a distinct image that other [CATEGORY] do not have
FamiliarI am familiar with and understand what this [CATEGORY] is about
Popular/Highly Thought of by Many
The [BRAND] is a popular [CATEGORY]
Willing to payCosts more than I expected/am willing to pay
Costs more than others in this category
Comparison to Competitors’ Prices
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Brand
Offer
Experience
Relationship
Price
Building blocks of loyaltyMobile Phone
23%
30%
10% 16%
21%
Broadband
31%
29%
10% 14%
16%
Digital TV
32%
25%
4% 12%
27%
Landline
23%
31%
6%20%
20%
“Relationship” most important building block for mobile and landline, experience for “Broadband” and
Digital TV
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Drivers of Loyalty
Satisfaction with the service and perceptions of quality are drivers of loyalty whilst trust and affinity are barriers to loyalty
Brand =14%
Offer =16%
Experience =31%
Relationship =29%
Price =10%
Barriers to Loyalty
Familiarity
Popularity
Differentiation
Relevance
Satisfaction
Quality
Trust
Affinity
Willingness to pay
Comparison
Overall contribution of building block
Total UK Broadband market summaryThe importance of each Building Block and Mega Driver in explaining Loyalty
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Drivers of Loyalty
Lack of trust, affinity and differentiation arebarriers, perceived quality a main driver
Brand =16%
Offer =21%
Experience =23%
Relationship =30%
Price =10%
Barriers to Loyalty
Familiarity
Popularity
Differentiation
Relevance
Satisfaction
Quality
Trust
Affinity
Willingness to pay
Comparison
Overall contribution of building block
Total UK Mobile Phone market summaryThe importance of each Building Block and Mega Driver in explaining Loyalty
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Drivers of Loyalty
Relevance and familiarity drive loyalty (likely to be a result of BT) whilst trust and affinity are barriers to loyalty
Brand =20%
Offer =20%
Experience =23%
Relationship =31%
Price =6%
Barriers to Loyalty
Familiarity
Popularity
Differentiation
Relevance
Satisfaction
Quality
Trust
Affinity
Willingness to pay
Comparison
Overall contribution of building block
Total Landline market summaryThe importance of each Building Block and Mega Driver in explaining Loyalty
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Drivers of Loyalty
Relevance is a key driver of loyalty – thisis likely to relate to relevant channel packages
Brand =12%
Offer =27%
Experience =32%
Relationship =25%
Price =4%
Barriers to Loyalty
Familiarity
Popularity
Differentiation
Relevance
Satisfaction
Quality
Trust
Affinity
Willingness to pay
Comparison
Overall contribution of building block
Total UK Digital TV market summaryThe importance of each Building Block and Mega Driver in explaining Loyalty
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Four steps to capture market share in the multi-play market
For acquisition:
1. Accentuate a value based proposition
2. Broadband - the lead service
3. Consider options for premium TV
4. Build a multi-play brand
For retention:1. Build and engender
trust and a feeling of closeness with customers
2. Focus on reliability of service provision
3. Keep customers informed of your competitively priced bundles
4. Maintain a differentiated brand to shore up existing customers