Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of t...
Objective
 In 4Q 2010, Verizon exceeded in its goal of 70% smartphone take-rate for activations.
However, we need to cont...
The Rogers Technology Adoption Curve
Confidential and proprietary material for authorized Verizon Wireless personnel only....
Current U.S. Smartphone Penetration
Confidential and proprietary material for authorized Verizon Wireless personnel only. ...
U.S. Smartphone Position on Adoption Curve
Confidential and proprietary material for authorized Verizon Wireless personnel...
U.S. Smartphone Penetration Is Much Greater
in MC than General Market
• Hispanics and Asians have consistently led in smar...
U.S. Operating System (OS) by MC Group
• Hispanics are fairly evenly divided between the three major key players
– iOS, wh...
Where Does Verizon Stand?
Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, discl...
Aligning Verizon’s Customer Segments
to the Adoption Curve
Confidential and proprietary material for authorized Verizon Wi...
Who Are Majority Adopters?
In comparison to Innovation/Early Adopters, the Majority Adopters:
 Are a little older.
 Are ...
Majority Adopters: What Are They Thinking?
Confidential and proprietary material for authorized Verizon Wireless personnel...
How We Can Help Build Confidence to Get a
Smartphone
Confidential and proprietary material for authorized Verizon Wireless...
Their Adoption Barrier is the Cost-benefit of
Plan Costs vs. Constant Connectivity
A/a = Significantly higher than corresp...
A Good Plan Deal Bundled with an Inexpensive yet
Proven Device Could Tip the Scales in Verizon’s Favor
What Would Motivate...
In Absence of a Compelling Bundle, How We Should Treat
Customers Differently to Encourage Smartphone Adoption
Confidential...
Treat Customers Differently to Encourage
Smartphone Adoption, cont’d
Confidential and proprietary material for authorized ...
Treat Customers Differently to Encourage
Smartphone Adoption, cont’d
Confidential and proprietary material for authorized ...
APPENDIX
Source References
 Experian. 2010 Technology Adoption Consumer Report: Spring 2010.
 High Tech Strategies, Inc. Historic...
Who Uses Data?
Looking at gender, age and race/ethnicity and assuming females, those age 35-44 and white as
the base (inde...
Different Verizon lines of business can use the following insight in different ways:
 Innovators and Early Adopters are a...
Majority Adopters Think About Technology Differently
than Early Adopters
Early Latevs.
Majority Adopters
Key Trait Pragmat...
In Absence of a Truly Compelling Bundle,
Consider Subtle Messaging Changes
Obviously, mass media reaches prospects and cus...
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CRM: The psychology of SmartPhone Majority Adopters and implications for CRM marketing

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More than 2 years old in the fast-paced consumer smartphone category, this presentation exemplifies how agency leadership and insight can help marcom clients agree that when the market shifts, their communications strategy needs to keep-up. Primary and secondary research informed recommendations to evolve Verizon Wireless's CRM strategy in terms of: product mix featured and positioning; comms channels employed; creative layout and messaging tone; CTA.

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CRM: The psychology of SmartPhone Majority Adopters and implications for CRM marketing

  1. 1. Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Smartphone Adoption: The psychology of Majority Adopters and implications for CRM marketing February 2011
  2. 2. Objective  In 4Q 2010, Verizon exceeded in its goal of 70% smartphone take-rate for activations. However, we need to continue to drive that goal now that we’re out of the promotional holiday period.  This review consolidates several information sources (see Appendix) to address questions about users who have not yet adopted smartphones: – What are they thinking? – What do they need to be confident in their purchase decisions?  This review also provides implications for how we message in mass media and treat customers in CRM. Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 2
  3. 3. The Rogers Technology Adoption Curve Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Rogers Technology Adoption Curve 3 Source: Everett M. Rogers: Technology Lifecycle Adoption Curve  A technology diffusion model that Everett Rogers generalized describes how new ideas and technologies spread in different cultures.  This model describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups. Time
  4. 4. Current U.S. Smartphone Penetration Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Industry’s current estimate is 30% U.S. smartphone penetration, 10 pp behind projection.  Current industry estimates indicate that the U.S. is at about 30% smartphone penetration rate.  That is approximately 10pp behind where Nielsen had projected the U.S. to be at this point in time (40% penetration ). 4
  5. 5. U.S. Smartphone Position on Adoption Curve Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Roger’s Technology Adoption Curve Cumulative 2.5% 16% 50% 84% 100% With 75%-80% smartphone take rates, the industry is suddenly moving up the curve quickly.  We have reached Majority adoption, but not as far as you may think.  It took 12 years to get to 16% penetration, but only two more years to almost double to 30% penetration. 1996 2008 2010 12 years 30% Majority Adopters are the 2011 target. 5 2 years Source: 4Q earnings releases 4Q 2010 Smartphone Take Rate1 Penetration2 VZW 75% 24% AT&T 80% 44% Sprint 69% 37% T-Mobile Not Available 38% 1 Financial earnings releases 2 Nielsen Mobile
  6. 6. U.S. Smartphone Penetration Is Much Greater in MC than General Market • Hispanics and Asians have consistently led in smartphone penetration, with anywhere from 6-12% higher penetration than other race/ethnic groups • In Q410, Hispanic and Asian penetration is also about 50% higher than the general market Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 6 Source: Verizon Wireless Performance Update, Nielsen, Oct. 1, 2010-Dec. 31, 2010 Industry’s Q410 current estimate is 30% U.S. smartphone penetration 30%
  7. 7. U.S. Operating System (OS) by MC Group • Hispanics are fairly evenly divided between the three major key players – iOS, while the most expensive, is the leading system for Hispanics – Hispanics are value conscious, not just price sensitive – this suggests they see value in iOS that is worth the added cost • African Americans use RIM the most, but interestingly, also choose operating systems outside of the leading three Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 7 Source: Verizon Wireless Performance Update, Nielsen, Oct. 1, 2010-Dec. 31, 2010
  8. 8. Where Does Verizon Stand? Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 8 New Customers (First Contract Customers**) 30% Tenured Customers (Non First Contract Customers) 27% VS. Smartphone Penetration DirectionallyGood Directionally good, but expected a wider gap Goal Smartphone Take Rate 70%* * Note that Value Tracker found that 68% of its shoppers were interested in taking a smartphone, both Advanced to Advanced and Basic to Advanced. ** First Contract Customers (FCCs) are defined as new-to-Verizon customers on their first contract in contract months 0 to 30, meaning they joined any time from December 2010 back to June 2008. They represent 12% of lines in base (7.9 million). Customer data provided by the CRM team.
  9. 9. Aligning Verizon’s Customer Segments to the Adoption Curve Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Roger’s Technology Adoption Curve Cumulative 2.5% 16% 50% 84% 100%  At 26%, Verizon is a little behind the industry in terms of smartphone adoption, but with smartphone take rates at 75%, Verizon is catching up very quickly (and, iPhone…).  Verizon’s new segmented customer base communication streams align well with the technology adoption curve (depicted below). 26% 9 Innovation (all lines are on smartphones) Smartphone Propensity (all lines are likely to take smartphones soon) Value (80% on basic/feature phones) Mass (68% on basic/feature phones) OOC 6+ Verizon’s smartphone penetration is 26%
  10. 10. Who Are Majority Adopters? In comparison to Innovation/Early Adopters, the Majority Adopters:  Are a little older.  Are more likely to be in families with children.  Are more likely to be on a shared plan.  Are less likely to feel the need to be connected to the Web/Email all of the time.  Are more likely to feel that data plans are too expensive.  Are more likely to be motivated to adopt a smartphone if the plan, not the device, was affordable.  Are less likely to have an employee discount, thus they are more price sensitive than Innovators/Early Adopters.  Show a strong preference for purchasing wireless services or devices in carrier stores vs. online or at retailers (that carry multiple wireless brands) – they feel the staff in carrier stores are more knowledgeable. Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 10
  11. 11. Majority Adopters: What Are They Thinking? Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Early Majority Adopters Late Majority Adoptersvs. Key Trait Pragmatic Prefer “tried and true” products Resistant Demands are rarely met by new products CRM Smartphone Propensity Shopper Marketing Retail Advertising Approach Thoughtful and Deliberate “They like to stay with the herd.” Conservative and Skeptical “If it ain’t broke, don’t fix it.” Influencers New opportunities/ Incremental improvements Economic benefit/ Ease of use Drivers Change to build efficiencies Change out of necessity Technology POV Optimistic Believe technology can make life better Pessimistic Believe new products overpromise 11 CRM Value / Mass
  12. 12. How We Can Help Build Confidence to Get a Smartphone Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Early Majority Adopters Late Majority Adoptersvs. Nudging, encouraging to follow the herd Educate how smartphones can help them do what they do now, easier and more efficiently Easy to understand plans and value-minded pricing for plans & devices (e.g., family plans and BOGO/BOGA devices) Guidance to what’s popular and proven, to what people like them choose (e.g., plans, devices, apps, features) Guidance to self-directed trial, selection help, tips for switching, device/account set- up, device training Wash away resentment Educate that while still a great phone, you can do so much more Least expensive plans and least expensive devices Guidance to proven entry-level experience (e.g., plans, devices, apps, features) Guidance to aided trial, selection help, tips for switching, device/account set-up, device training 12 Tone Educate Bundling Training Offerings CRM Smartphone Propensity Shopper Marketing Retail Advertising CRM Value / Mass
  13. 13. Their Adoption Barrier is the Cost-benefit of Plan Costs vs. Constant Connectivity A/a = Significantly higher than corresponding column at 95%/90% confidence level D03B1. Why are you ... to purchase a PDA or Smartphone in the next 3 months? Why don’t plan to purchase Smartphone in the next three months? (%) Total Basic Shoppers 4Q10 4Q10 C J Base: Don't Plan To Purchase Smartphone Or PDA N3M 1421 418 Don't want/need to be connected to email/web all the time 37 45 F Data plan is too expensive 35 48 F Waiting for a specific device to become available 13 8 Don't/didn't understand how to use all the smartphone features 9 13 F Don't like the choice of devices available 8 8 Other 20 6 4Q 2010 Value Tracker
  14. 14. A Good Plan Deal Bundled with an Inexpensive yet Proven Device Could Tip the Scales in Verizon’s Favor What Would Motivate Smartphone Purchase Today (%) Total Basic Shopper Smartphone Non-Intenders Basic Shopper Smartphone Intenders 4Q10 4Q10 4Q10 C E G Base: Total Respondents 1992 418 172 A good deal on the device 42 40 59 E A good deal on the monthly data plan 40 41 66 E A good deal on the monthly calling plan 38 41 62 E A good deal on a family data plan 32 36 40 Free applications 30 29 42 E Data plans starting at $15 per month/per line 23 22 38 E Other 3 3 2 None of the above 20 19 G 1 A/a = Significantly higher than corresponding column at 95%/90% confidence level D03C1. Would any of the following motivate you to upgrade to a smartphone/advanced device today? 4Q 2010 Value Tracker
  15. 15. In Absence of a Compelling Bundle, How We Should Treat Customers Differently to Encourage Smartphone Adoption Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Early Majority Adopters Late Majority Adoptersvs. 15 Device Offers  BOGO, BOGA  $$ off  Secondary line offers  Shared upgrade eligibility  Free phone  Trade-in  Online only deals Plan Offers  Family friendly data  Share plans  One month free  Share plans Appropriate Offers/Devices Device Selection  All smartphones  Most popular and highest rated  Both smartphones and feature phones Communication Channels Channels  Mail  Email  Text  Mail  Email CRM Smartphone Propensity Shopper Marketing Retail Advertising CRM Value / Mass
  16. 16. Treat Customers Differently to Encourage Smartphone Adoption, cont’d Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Early Majority Adopters Late Majority Adoptersvs. 16 Creative Offer Prominence  Equal prominence for device and plan offers  Plan offer or description more prominent than device offer Device Positioning  Most popular  5-star rated  Fastest selling  7 out of 10 Verizon customers choose smartphones  Durable and reliable, our customers keep for an average of XX years  Best price ever  Our lowest priced smartphones  User friendly Benefits (of having a smartphone)  Everything you love about being online in your palm  Owner quotes (e.g., they don’t call it “crackberry” for nothing)  Stay more in-touch with friends and family than you can imagine  Streamline your life  Never be at a loss for entertainment/sports  Convenience of always having access to important information  Owner quotes (e.g., they don’t call it “crackberry” for nothing)  Replace paper that gets lost (e.g., coupons, boarding passes, etc.) CRM Smartphone Propensity Shopper Marketing Retail Advertising CRM Value / Mass
  17. 17. Treat Customers Differently to Encourage Smartphone Adoption, cont’d Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Early Majority Adopters Late Majority Adoptersvs. 17 Education  Data need estimator  Smartphone selection guidance based on “what you like to do”  Smartphone benefits and tutorials  Most popular apps  Data need estimator  Free features (e.g., BBM, Skype, Wi-Fi etc.)  Offer to pre-load apps and/or send to store for help Call to Action  Outfit your family today  Schedule an appointment today Creative, continued Post-purchase Education/ Cross-sell  Tutorials and training online, in-store  Most popular apps for OS  Encourage to write a review at vzw.com  Accounts like yours have XYZ account mix  Encourage to “refer a friend”  Tutorials and training online, in-store  Most popular apps for OS Post Purchase CRM Smartphone Propensity Shopper Marketing Retail Advertising CRM Value / Mass
  18. 18. APPENDIX
  19. 19. Source References  Experian. 2010 Technology Adoption Consumer Report: Spring 2010.  High Tech Strategies, Inc. Historical Perspective: The Technology Adoption Lifecycle. http://www.hightechstrategies.com/profiles.html  Coatings World. New Technology Adoption, Part IV: May 2008. http://findarticles.com/p/articles/mi_hb053/is_5_13/ai_n29437896/?tag=rel.res2  Wivoda Consulting, Inc. Information Technology Adoption: Moving from a cost of doing business to strategic advantage.  Forrester. Segmentation Consumers By Technology Preference: April 2009.  Rogers, Everett M. Diffusions of Innovations: 2003. http://steveapplegate.com/consultant/adopter/index.htm  Green Book. Research on Trends: Influentials, Innovators & Early Adopters. http://www.greenbook.org/marketing-research.cfm/influentials-innovators-early-adopters  5MetaCom. Understanding the Technology Adoption Life Cycle. 1999. http://www.5metacom.com/Assets/PDF/TechAdoptionLifeCycle.pdf  Verizon Wireless Performance Update, Nielsen, Oct. 1, 2010-Dec. 31, 2010.
  20. 20. Who Uses Data? Looking at gender, age and race/ethnicity and assuming females, those age 35-44 and white as the base (index of 100): • Men, youth (ages 18-34), and non-white ethnic groups all over index – Men = 1.39 – Youth (average) = 1.23 – Non-white Races (average) = 1.32 • Hispanics, in particular, drastically over index at 1.42 Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. 20 Smartphone MB Usage Levels by Demographics Source: Verizon Wireless Performance Update, Nielsen, Oct. 1, 2010-Dec. 31, 2010
  21. 21. Different Verizon lines of business can use the following insight in different ways:  Innovators and Early Adopters are always passively shopping, therefore we want to message to those who are competitive switchers in mass media, in-store, and via customer communications.  Early Majority adopters are now likely to be in the market for a smartphone, therefore we want to message to them in mass media, in-store, and via customer communications.  Late Majority adopters probably are not in the market for a smartphone. – We need to keep an eye on industry smartphone take rates during 2011 to identify when it will make sense to message to them in mass and in-store. – However, we can target Late Majority Adopters via direct customer communications. Applying Insight by Lower Funnel Marketing Responsibility Confidential and proprietary material for authorized Verizon Wireless personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Innovators & Early Adopters Early Majority Late Majority Retail Advertising Message To (competitive switchers) Message To Do Not Message to in 1H 2011 Shopper Marketing Message To (competitive switchers) Message To Do Not Message to in 1H 2011 CRM Target Innovation 1 Segment Target Innovation 2 Segment Target Value/Mass Plus Segments 21
  22. 22. Majority Adopters Think About Technology Differently than Early Adopters Early Latevs. Majority Adopters Key Trait Pragmatic Prefer “tried and true” products Resistant Demands are rarely met by new products Judicious Likes to be seen as opinion leader Approach Thoughtful and Deliberate “They like to stay with the herd.” Conservative & Skeptical “If it ain’t broke, don’t fix it.” Managed Risk “Willing to spend money early in trial.” Influencers New opportunities/ Incremental improvements Economic benefit/ Ease of use Opportunity to leap frog/ Each Other Drivers Change to build efficiencies Change out of necessity Change to keep competitive edge Technology POV Optimistic Believe technology can make life better Pessimistic Believe new products overpromise Enthusiastic High utilization of technology Early Adopters
  23. 23. In Absence of a Truly Compelling Bundle, Consider Subtle Messaging Changes Obviously, mass media reaches prospects and customers across the full adoption curve. Therefore, we need to balance messaging to switching Early Adopters vs. to customer and switching Majority Adopters. Early Adopters Early Majority Adoptersvs. Device Positioning  Latest and greatest  Be the first/only to have  The next generation of  Better than ever before  4 stars from Engadget, BRG  Most popular  Most popular among families with kids  Fastest selling  Easiest to use  4 stars from Consumer Reports Device Benefits  Everything you love about being online in your palm  Owner quotes (e.g., they don’t call it “crackberry” for nothing)  Stay more in-touch with friends and family than you can imagine  Streamline your life Device Offers  BOGO, BOGA  $$ off  Free device set-up and training  Free switching tips Plan Offers  Family friendly data  Data plans starting as low as  Share plans  Speeds & Feeds  More power in your palm  Power your tablet with this phone’s hotspot  Automatic system updates  $$ off advanced device bundles  Register now to be the first  Register now to get one of the limited  Device trade-in  XX MB data for only $$ per month  Data plans starting as low as  Family friendly data

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