CONNECTED CONSUMER SURVEY 2016: MOBILE CUSTOMER SATISFACTION IN EUROPE, SOUTH KOREA AND THE USA

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1 RESEARCH SURVEY REPORT CONNECTED CONSUMER SURVEY 2016: MOBILE CUSTOMER SATISFACTION IN EUROPE, SOUTH KOREA AND THE USA KEREM ARSAL and HEENU NIHALANI analysysmason.com

2 About this report This report focuses on aspects of Analysys Mason s Connected Consumer Survey that relate to the behaviour, preferences and plans of mobile users in Europe, South Korea and the USA. In particular, it focuses on churn and retention-related aspects of mobile services. This part of the survey was conducted in association with Survey Sampling International (SSI). USA GEOGRAPHICAL COVERAGE Poland Germany UK France Spain South Korea The research was conducted in July and August The survey groups were chosen to be demographically representative of the broader online consumer population. We set quotas on age, gender and employment status to that effect. There were a minimum of 1000 respondents per country. The total sample size was 8270 respondents. Turkey KEY QUESTIONS ANSWERED IN THIS REPORT What key factors influence consumers intention to churn? How have consumers priorities been evolving? What are the Net Promoter Scores (NPSs) of operators in Europe, South Korea and the USA? Who leads and why? What is the role of bundling (services or devices) on customer retention; how does churn differ by tariff (prepaid, contract or SIM-only)? What is the relationship between network performance and customer satisfaction, especially in terms of speed and coverage (for example, 3G compared to 4G)? How important is access to faster mobile data speeds and larger allowances? WHO SHOULD READ THIS REPORT Operator-based strategy executives and marketing managers who are interested in understanding consumer market trends, the role of operators as smartphone distribution channels, and the impact of differing approaches to pricing in the market. Market intelligence and research executives in service providers that are responsible for understanding end-user trends and supporting business units in identifying and addressing new opportunities. Product managers who wish to understand how particular service design aspects (such as bundling and pricing) influence customer satisfaction and what are the key levers to improving retention. 2

3 Price remains the most stated reason to churn in 2015, but reasons related to service design and networks have become more important European consumers were as likely in 2015 to cite price as a notable reason for churn as they were in 2014, but the variety of reasons for churn is expanding. Consumers in Europe prioritise price as a reason to change operator, but their attention is turning to a variety of other reasons, such as specific packages, fixed mobile convergence (FMC) bundles and network quality. This implies that in the near future, operators may need to adapt to a more-complex consumer profile with a range of diverse needs. When coverage and data speed are viewed as a single category, the need for operators to pay attention to their networks also becomes clear. In South Korea, Turkey, the UK and the USA, network-related reasons for churn challenge the importance of those related to price. Customer service was mentioned by fewer respondents as a churn reason in 2015 (20%) than 2014 (25%). However, we find that although our respondents cite issues around networks and price more frequently when asked directly for their churn reasons, the greatest determinant of their intention to churn is actually related to how they rate customer services in terms of satisfaction: a one (out of seven) point increase in their score of satisfaction with customer service reduces stated intent to churn significantly more than equivalent improvements in satisfaction scores of other service aspects. Figure 1: Intention to churn from mobile operator by reason, percentage of respondents, Europe, 2014 and 2015 Churn category Prices and bundles Cheaper deal elsewhere 52% 51% Different package 14% 19% Need bundle with home broadband N/A 8% Networks Poor coverage 19% 20% Poor data speed 16% 18% Customer experience Poor customer service experience 25% 20% Handsets Handset availability/bundling 6% 10% Other 4% 5% Source: Analysys Mason Question: 2015 (2014): Why do you intend (plan) to change your mobile provider?, n = 748 (607). 4

4 More voice minutes and SMS Connected Consumer Survey 2016: mobile customer satisfaction in Europe, South Korea and the USA Customers that plan to make changes to their tariff are increasingly focused on larger data allowances We asked respondents who stated that they planned to change their mobile plan (either churning or staying with the same provider) what they will look for in the new tariff. Most view larger data allowances as more important than more SMS text messages and voice minutes. 1 This confirms the importance of mobile data for consumers, but also the restrictive nature of data caps, relative to the unlimited or generous voice and SMS allowances increasingly included in mobile plans. Subscribers in South Korea and Turkey were the most interested in higher data allowances. In South Korea, this could reflect demand for unlimited data plans that are widely available in that market, or, among those who already have such plans, demand for larger unthrottled allowances. In Turkey, consumers also want more minutes, a probable outcome of the absence of unlimited plans in the market. Consumers in Western Europe and the USA were largely clustered together, with a mild preference for more data. Operators in these countries offer unlimited voice and/or SMS on most plans, so consumers focus on raising their data caps. Consumers in Poland and France were exceptions. In both countries, consumers are looking for better deals for international minutes. French operators recognise this demand and regularly include international minutes within their tariffs. Figure 8: Percentage of respondents who want more data in their next mobile plan, compared to those who want more voice minutes and SMS, by country 30% 25% 20% 15% 10% 5% Voice minutes and SMS more important Poland France UK USA Germany Spain Turkey South Korea Data allowance more important 0% 0% 5% 10% 15% 20% 25% 30% Higher data allowance Source: Analysys Mason 1 Including better rates for voice calls not covered by their tariffs, such as international calls. Question: Which of the following factors will most attract you to your next mobile plan?, n =

5 CONTENTS EXECUTIVE SUMMARY KEY DRIVERS OF MOBILE CUSTOMER CHURN EFFECTS OF BUNDLING ON MOBILE RETENTION MOBILE NETWORKS AND CHURN METHODOLOGY AND PANEL INFORMATION ABOUT THE AUTHORS AND ANALYSYS MASON 29

6 About the authors Kerem Arsal (Senior Analyst) is a key contributor to Analysys Mason s Mobile Services research programme, which helps operators to understand, and monetise to maximum efficiency, the interplay between voice, messaging and data services. His work involves in-depth coverage of issues such as customer retention, mobile data pricing, MVNO strategies, and the impact of regulation and roaming. Previously, Kerem was a research manager at Pyramid Research, where he was responsible for setting the thematic research agenda across multiple tracks and regions. He also headed numerous projects around operator strategies, as well as commercialisation of, and demand assessment for, new products in the consumer and enterprise segments. Heenu Nihalani (Research Analyst) is a member of Analysys Mason s Consumer Services research team in London, contributing to the Mobile Services, Mobile Devices, Future Comms and Media, and Digital Economy Strategies research programmes. Prior to joining Analysys Mason, she worked as a financial knowledge broker in London, and as a journalist and copywriter in Hong Kong. Heenu holds an MSc in financial analysis from the Hong Kong University of Science and Technology, and a Bachelor s degree in philosophy, politics and economics from the University of Warwick. 30

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