WTS 2012 A European Perspective On The Telecommunications Industry


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WTS 2012 A European Perspective On The Telecommunications Industry

  1. 1. IBM Institute for Business Value How Recession and the Empowerment of Consumers impact the Telecommunications Industry - A European Perspective Rob van den Dam Global Communications Sector Leader IBV © 2012 IBM Corporation
  2. 2. IBM Institute for Business ValueAgenda  Industry Dynamics – 4 key trends  Global CMO Survey  Global Telecom Consumer Survey  Driving Customer Advocacy2 © 2012 IBM Corporation
  3. 3. IBM Institute for Business ValueTelecommunications is IBM’s #1 research focus Telecom Research TSL Russia Mobile Web Labs (Moscow Satellite TSL) Services TSL China & Telecom Research Lab TSL Israel & (Beijing) TSL Europe Telecom Research Lab (La Gaude & (Haifa Satellite TSL) Japan Montpellier, France) (Tokyo Satellite TSL) TSL North America Telecom Research Lab (Austin, Texas) (New Delhi) TSL India ASEAN (Bangalore Satellite TSL) (Kuala Lumpur Satellite TSL) TSL LATAM (Sao Paulo, Centers of Institute for Brazil Satellite TSL) Worldclass Excellence Business Africa South Partner Value (Johannesburg, Satellite TSL) Ecosystem Telecommunications Solutions Lab (TSL) Telecommunications Research Lab3 © 2012 IBM Corporation
  4. 4. IBM Institute for Business ValueThe IBM Institute for Business Value creates fact basedthought leadership that help clients realize business value Future Value Realization CXO Agendas Studies Surveys 3 to 10 year industry outlook In-depth assessment of today’s Chief Officiers studies – CEO, with action oriented next steps critical issues, opportunities, etc CIO, CMO, CFO, CHRO, etc.4 © 2012 IBM Corporation
  5. 5. IBM Institute for Business ValueWithin today’s transforming telecommunications landscape, fourmajor trends are apparent Consolidation continues OTT providers thrive The process of telecom OTT providers continue operators expanding to build a dominant outside their home position in the markets continues, with telecommunications new giants emerging landscape Mobile data explodes Consumers are seizing control People increasingly use People increasingly the mobile internet. connect with each Video is the fastest other to exchange growing application. information and influence CSPs5 © 2012 IBM Corporation
  6. 6. IBM Institute for Business Value Consolidation continues – Many CSPs have become international companies by expanding their business across multiple countries As part of the sector’s 15 multi-country (10 or more countries) transformation, many companies now control ± 3 billion subs telecom operators have increased their footprints Number Subs 2010 outside their home markets Company (HQ) of (mio) Rev Countries France Telecom (France) 32 217 63,3 Telefonica (Spain) 25 231 88,5 Challenges: Bharti (India) 21 243 21,2  How can the multi-country CSP MTN (South Africa) 21 137 17,0 leverage their scale and identify Vodafone (UK) 20 391 72,9 Singtel (Singapore) 20 382 13,6 the right synergy potential for Telia Sonera (Sweden) 19 160 16,3 their company? Vimpelcom (NL) 19 159 24,0  How can the single-country America Movil (Mexico) 18 236 51,3 CSP compete against global Etisalat (UAE) 18 135 8,5 CSPs in their own market? Deutsche Telekom (Germany) 17 151 85,0 Tele2 (Sweden) 12 30 6,5 Telenor (Norway) 11 203 17,5 Emergence of multi-country Giants STC (KSA) 10 139 14,0 Axiata (Malaysia) 10 160 5,06 © 2012 IBM Corporation
  7. 7. IBM Institute for Business Value OTT providers thrive – but Value concentrates Combined Market Value Combined Market Value Top 25 Top drivers of Internet = ~1/2 150 CSPs traffic Top 4 = 70% of total of top 25 Premium priced devices, customer OTT providers – in particular the top 4 – will eco-system, pay for product (apps, continue to build and expand their dominant iTunes, iCloud) position in both mature and emerging markets Search and advertising value cap- ture, customer data monetization Extensive retail portfolio, retail Challenges: portal infrastructure, recommen-  How can CSPs compete against OTT dation engine, advertising value capture players? Dominant market position,  Or better, if they cannot beat them, how can advertising value capture, self- they partner with OTT providers in a way content creation business design they both benefit?7 © 2012 IBM Corporation
  8. 8. IBM Institute for Business ValueMobile data (really video) explodes Global Mobile Data Traffic, 2011–2016 (TB x 1000/ month) 10 8 0 4 10804 Mobile VoIP Middle East & Africa Mobile Gaming 20% Central & Eastern Europe Mobile File Sharing 6896 Latin America 78% 6896 18% CAGR Mobile M2M North America 4215 23% Mobile Web/Data 4 2 15 Western Europe Mobile Video Asia Pacific 2379 2 3 79 70.5 12 52 % 1252 40% 59 7 597 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 Mobile data – in particular OTT video – will • Global mobile data grew 2.3-fold dramatically increase • Mobile video traffic exceeded 50% • Average smartphone usage trippled Challenges: 2016  How can CSPs cope with the ever- • Mobile data traffic will increase 18-fold increasing amount of data, and how can • 2/3 of mobile data traffic will be video they close the mobile data revenue gap?8 © 2012 IBM Corporation Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011–2016..
  9. 9. IBM Institute for Business ValueConsumers are seizing control What happens when being disconnected? Most/ Always sometimes Never 12/29/11 Press Release: Attempt to redial/reconnect 48% 44% 7% 81% “Starting January 15, a new $2 payment Avoid providers with whom Avoid convenience fee will be instituted for 25% 56% 19% Providers friends had bad experiences customers who make single bill with poor payments online or by telephone” Tell friends about my poor 16% 61% 23% experience experience Contact customer service 9% 51% 41% 77% Within 24 hours, more than 100,000 Switch providers, - Tell friends/ e.g. use a different SIM 10% 56% 45% family bout people had signed a online petition: their poor Greetings, My provider proactively 5% 31% 65% experience I am disappointed to learn that Verizon Wireless contact me plans to institute a new $2 fee for paying bills Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237 online…. Your company should not assume that it can do anything to your customers and Consumers now have unprecedented power that we will allow it to happen… to build and demolish brand strength as they blog, text and comment via social media 12/30/11 Press Release: Challenges: “Verizon Wireless has decided it will not institute the fee for online or telephone single payments that was  How can CSPs get in tune with todays announced earlier this week. digital consumers, and respond to negative The company made the decision in response to customer feedback about the plan…” chatter? © 2012 IBM Corporation9
  10. 10. IBM Institute for Business ValueTo evaluate the impact of the recession and the empowerment ofconsumers the IBV conducted both a Consumer ánd a CMO survey IBM Global Consumer Survey IBM Global CMO Survey (25 countries;13,237 consumers) (131 interviews with telecom CMOs)10 © 2012 IBM Corporation
  11. 11. IBM Institute for Business ValueCSP CMOs indicated they feel underprepared particularly in areas thatare key for connecting to customers, identified as most critical for them Global Marketing Priority Matrix 1 Customer collaboration and influence Underpreparedness 6 2 Growth of channel and device choices Percent of CMOs reporting underpreparedness 370 3 Social media 10 4 Data explosion 9 5 Decreasing brand loyalty 11 5 6 1 7 6 Shifting consumer demographics60 7 ROI accountability 2 8 Regulatory considerations 4 8 9 Emerging market opportunities 750 11 10 Financial constraints 12 11 Privacy considerations Factors impacting marketing 12 Corporate transparency40 Percent of CMOs selecting Telecom (CSPs) as ‘Top five factors’ 13 Global outsourcing 0 20 40 60 MeanSource: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? n1=131 Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? © 2012 IBM Corporation11
  12. 12. IBM Institute for Business ValueThe IBM Institute for Business Value conducted a survey of more than13,000 consumers in 25 countries in both mature and emerging markets Consumer Spending Consumers’ Adoption of Consumer Sources of priorities for 2011 – digital comms services Information for 2013 and products services/products Consumer Profiles and Customer Advocacy Revenue Opportunities Attitudes towards their and Antagonism with ‘connected providers consumers’ Surveys conducted in 25 countries mid 201112 © 2012 IBM Corporation
  13. 13. IBM Institute for Business Value Consumer sentiment on future spending in western European countries is far less than that in emerging European countries UK Net Increase/Decrease Russia Net Increase/Decrease 15% Utilities Utilities Utilities Utilities 50% Food & drinks Food & drinks -19% average -8% Mobile Telephony Mobile Telephony 25% Transportation Transportation -9% Food & drinks Food & drinks 24%Mobilebroadband usage Mobile Broadband -13% Transportation Transportation 23% Pay Pay television television -15% Clothing Clothing 14%Mobile Telephony Mobile phone usage -17% Mobile Broadband Mobile Broadband 14%Fixed Telephony. Landline/wireline usage -19% Elect. Appliances Electrical appliances 13% Sports Sports -26% Holiday/vacation Holidays 12% Holidays Holidays/vacations -27% Fixed Telephony Fixed Telephony 7% Clothing Clothing -29% Pay Television Pay television 4% Elect. Appliances Electrical appliances -33% Sports Sports -10% +13% average Going out Going out -43% Going out Going out -19% 13 Source: 2011 IBM Global Telecom Consumer Survey, UK N = 797: Russia N = 514 © 2012 IBM Corporation 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?
  14. 14. IBM Institute for Business Value More than less consumers in western European countries expect to reduce spending on mobile telephony and broadband Netherlands Germany Net Increase/Decrease Australia Canada. Portugal Belgium Sweden Greece Cyprus France Japan Spain 38% 40% 44% USA Italy UK 31% 20% 22% 25% 25% 16% 1% Czech R. Russia UAE China Poland India Korea Brazil Mexico South Africa -9% -9% -8% -8% -7% -5% -4% -17% -12% -22% -19% -18% -30% -29% -56% Spending on MOBILE Telephony (Voice, SMS, etc) (2012 – 2014) Emerging Markets Netherlands Germany Czech R. Australia Canada. Portugal Belgium Sweden 45% GreeceNet Increase/Decrease France Cyprus Japan Spain 35% USA 31% Italy UK 12% 15% 15% 5% 6% 8% -7% -7% -6% -6% -3% -2% South Africa -10% -9% Russia UAE China India Korea Poland Brazil Mexico -15% -13% -12% -20% -16% -25% -32% -43% Spending on MOBILE Broadband (2012 – 2014) 14 © 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372
  15. 15. IBM Institute for Business ValueMany consumers have switched to – or increased use of – OTTcommunication services Daily Usage 70% 1 Email/IM/Chat 85% Daily access of SOCIAL 2 Mobile Telephony 84% Countries Emerging NETWORKING sites in 60% European countries 3 Social Networking 60% 4 Fixed Voice 56% 5 Video Streaming 49% 50% 6 7% 6 VoIP 34% 63% 64% 60% 1 Email/IM/Chat 70% 40% 49% 51% Countries 4 5% 4 6 % 4 6 % 2 Mobile Telephony Mature 66% 4 1% 40% 3 Fixed Voice 46% 34% 36% 5 Social Networking 45% 30% Italy Sweden Greece France Spain Poland Russia Portugal Belgium UK Czech R. Netherlands Germany 5 Video Streaming 28% 6 VoIP 13%15 © 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372
  16. 16. IBM Institute for Business ValueConsumers’ Perception of network quality is relatively poor, yet mostconsumers do not engage with CSPs on these issues30% Frequently DROPPED MOBILE Question: Do you ever complain to20% CALLS as perceived by consumers your service provider when you are disconnected from the network? 25% 100%10% 21% 23% 17% 13% 14% 8% 8% 9% 11% 12% No 6% 6% 80% 38% 35% 0% 47% 44% 50% 48% Netherlands Italy Belgium Germany Czech Sweden Poland Russia Portugal France Spain UK Greece 54% 63% 60% 59% 57% 69% 67% 60%30% Frequently DISCONNECTED MOBILE INTERNET 40% SESSIONS as perceived by consumers 62% 65%20% 53% 56% 46% 50% 52% 20% 37% 40% 41% 43% 25% 25% 23% 31% 33%10% 19% 20% 21% 12% 12% 15% 16% 17% 18% Yes 9% 0% 0% Netherlands Italy Belgium Germany Czech Russia Sweden Poland Portugal France Spain UK Greece Netherlands Italy Belgium Germany Czech Russia Sweden Poland Portugal France Spain UK Greece16 © 2012 IBM Corporation
  17. 17. IBM Institute for Business ValueRanking of reasons for not complaining vary by country Netherlands Czech R. Germany Portugal Belgium Sweden Poland Greece France Russia Spain Italy UK Telco networks unreliable, variable service expected Reasons for NOT complaining Dont believe it make any difference Too much hassle to get through to the Call Centre Have to wait too long in queue to speak to Call Centre My Provider charge for calls to Call Centre My Provider is unable to resolve my problems Don’t know how to contact my Provider to complain17 Question: Why do you not complain to your service provider when you are disconnected from the network during a conversation, a voice © 2012 IBM Corporation call or internet session?
  18. 18. IBM Institute for Business ValueWhile consumers might not be connecting with their providers, theyare definitely connected with other consumers What happens when being disconnected? Always Most/sometimes Never Attempt to redial/reconnect 48% 44% 7% 92% Attempt Redial/ Reconnect Avoid providers associated with poor 25% 56% 19% experiences Tell friends/family about my poor 16% 61% 23% 77% experience Tell friends/family about their poor experience Contact customer service 9% 51% 41% Switch providers – e.g., use different SIM 10% 56% 45% 81% Avoid Providers with poorMy provider contacts me when I have a poor 5% 31% 65% experience network experience18 © 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237
  19. 19. IBM Institute for Business Value Family/Friends – and Internet Search and Social Media - have become the preferred sources of information What are you preferred sources of information when you are looking for communication products and services? 70% Internet search 66% 64% Recommendations from friends/family 51% 51% Social media 28% 45% Web sites of communication providers 35% 31% Traditional advertising 19% 22% Emails/ promotional offers 13% 19% Retail stores 23% Emerging markets Mature markets 17% Shopping portals/ auctions 8%19 Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372 © 2012 IBM Corporation Question: What are you preferred sources of information when you are looking for communication products and services?
  20. 20. IBM Institute for Business Value In a number of countries, Social Media is ranked as the number two source of information in the below 25 age group (South Africa #1) South Africa Netherlands Czech R. Germany Portugal Australia Belgium Sweden Canada Poland Greece Mexico France Russia Japan Korea China Spain Brazil India USA UAE Italy UK Internet search or comparison sites Recommendations / advice from friends, family, peers Social media, blogs, discussion groups, knowledge sharing web sites Websites of communication providers Under Traditional advertising 25s Retail stores Emails from comms providers, incl. promotional offers of new products Shopping portals/ auctions20 © 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372
  21. 21. IBM Institute for Business ValueCSPs should focus on this new trend and mine digital channels, suchas blogs, tweets, social networks and peer reviews • Get in tune with today’s digital consumers by listening to the digital dialogue • Become part of the dialogue and to be Blogs prepared to proactively respond to negative chatter Social Tweets Networks • Encourage a two-way dialogue and Peer embrace customer input by building online Reviews and offline communities • Find the influencers, and target them with appropriate messaging By capturing viewer insights from social media sources, RTL Nederland was able to gather timely feedback from viewers on the television programmes X Factor and So You Think You Can Dance. This helped the entertainment company to better understand audience needs and preferences and increase viewer satisfaction and involvement.21 © 2012 IBM Corporation
  22. 22. IBM Institute for Business ValueBharti Airtel understands how important it is to participate in thedigital dialogue and how it can help solving problems Having the official verified Twitter profile @Airtel_Presence, they are scanning for every tweet which contains the word “airtel” in it and giving appropriate replies to the customers and solving the issues. Airtel uses social network analysis to determine customers facing problems. Any mention on social media is captured and they get in touch with the customer to get the issue resolved.Abhilasha Hans, CSO “We take the business of customer satisfaction very seriously.22 Source:http://www.buzzom.com/2011/07/airtel-adopts-social-media-strongly-customers-can-live-chat-in-facebook-and-orkut/ © 2012 IBM Corporation http://telecomtalk.info/airtel-impact-on-social-media/51645/
  23. 23. IBM Institute for Business ValueA consumers’attitude is shaped by cumulative experience anddirects future behavior and suggestions for improvement Consumer Attitude Advocates Apathetics Antagonists CFiq: An Advocate is defined by three criteria A willingness to recommend one’s Likelihood to Recommend primary provider to friends and family AND A willingness to increase one’s purchases if one’s primary provider Purchase Intent expanded its assortment and offered products currently found only at other providers AND A willingness to stay with one’s primary Staying Rate provider, even if other providers begin offering competitive products or services23 CFiq: IBM’s approach for Customer Advocacy: Customer Focused Insight Quotient © 2012 IBM Corporation “CFiq versus NPS,” The Customer Institute,, 2007, http://thecustomerinstitute.blogspot.com/2007/09/cfiq-versus-nps.html
  24. 24. IBM Institute for Business ValueApplying CFiq on the global consumer sample, it is found that only18% are advocates, and 60% are antagonistic towards their CSP Advocates have a higher “I have recommended my Higher wallet share and are highly provider to several people” Shareholder “They have amazing customer Value complimentary of the service” provider capability “They are more expensive but I hardly get disconnected or have calls dropped” 18% 22% Apathetics are generally Advocates Apathetics passive participants susceptible to competitor offerings 60% “I think my telco over-charges me Antagonists but how can I prove it; my credit runs out too quickly after I top-up” “The promotions lack any Antagonists have low relevance to me” Lower wallet share and high “ I am looking to switch to the new provider offering cheaper rates” Shareholder support costs and are Value prone to bad-mouth the provider24 © 2012 IBM Corporation
  25. 25. IBM Institute for Business ValueThe low advocacy level contrasts with, for instance, the retail industry,where it is close to twice that of the telecommunications industry 80% Global average 18% 70% Belgium Global average 60% Portugal % Antagonists Spain 60% Poland Italy United Kingdom Germany France 50% Russia Netherlands Greece Czech 40% Republic Sweden 30% 0% 5% 10% 15% 20% 25% 30% 35% 40% % Advocates25 © 2012 IBM Corporation
  26. 26. IBM Institute for Business ValueCompetitive advantage takes a distinctive customer experience thatgoes beyond satisfaction and creates real value for the customer Customer Satisfaction Customer Experience (CSATs) beyond Satisfaction Apple customers have become passionate champions for the brand because of the unique experience Apple provides. Research has revealed that Apple advocates generate revenues about 45 percent higher than their competitors’ best customers.26 © 2012 IBM Corporation
  27. 27. IBM Institute for Business ValueCSPs do not account for the extreme gap in emotive attributes oftheir customer base Advocates Gap Antagonists % strongly agree % strongly agree 74% Offers me relevant products and services 29% 71% Values me as a customer 26% 73% Prompt correction of errors when they occur 29% 68% Listens and proactively follows-up on issues 25% 68% Listens and collects information necessary to meet 25% communication needs Find Give the CSP credit for 66% Resolves problems fairly 24% fault doing with “everything” 70% Allows me to customize products and services 29% “everything right ” CSP 70% Displays consistent level of knowledge 29% does 63% Provide advice to improve my user experience 24% 81% Allows multiple ways to interact with them 44% 72% Does not request for existing information repeatedly 42% Seeks input to develop new communication 48% 19%27 Products/services © 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237
  28. 28. IBM Institute for Business ValueAdvocacy is built on Trust Invoice My Telecom providers’ bill is accurate Trust in CSPs to manage identity and private/personal information Advocates Advocates 66% 26% 8% 34% 53% 13% Most Most Always of the Sometimes/ Least Never trusted Somewhat trusted trusted time 25% 39% 36% 10% 64% 26% Antagonists Antagonists Q09c Please provide an indication of your Q26 Who do you trust to manage your identity experience of the frequency with and private/personal information, including bills/charges are accurate medical data, transactions and social relationships and retain your privacy?28 © 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237
  29. 29. IBM Institute for Business ValueCSPs should focus on building new non-traditional capabilities, aswell as deeper understanding of customer preferences and attitudes We suggest four key recommendations to Emotive help CSPs become more customer focused: PerformanceTouchpoints Products andChannels & A. Improve customer experience insight by focusing Services Wants and on attributes that drive customer needs Rational Performance advocacy B. Apply a social behavior-driven “outside-in” perspective and become part of a two-way dialogue with the consumer C. Profile and target customer advocacy segments to improve advocacy levels D. Build multilevel capabilities to support the new approach to customer advocacy.29 © 2012 IBM Corporation
  30. 30. IBM Institute for Business ValueAre you prepared to augment advocacy? 10 Questions to consider • Does your organization know who your advocates are and what attributes define them? • Does your organization know who your antagonists are and what they might be saying about you? • How valuable are your advocates? What might drive more business from them? • Which elements of the customer experience are most important to your customers? How do you measure those? • Does your organization address both the rational and emotive drivers of behavior? • How are you leveraging customer and network analytics to improve the customer experience? • Do you have the right information on your core customers? Do you have a single view of the customer across all channels? • Do you exploit social network analysis to understand how your customers perceive your products and services? • How well do customer experience measures correlate to hard outcome measures30 such as churn, ARPU and customer profitability? • Does your current analytical capability support this challenge to improve advocacy? © 2012 IBM Corporation30
  31. 31. IBM Institute for Business Value Thank youEurope Global IBVMario Cavestany Bob Fox Rob van den DamIBM Vice President Europe Global Telecom Industry Leader Global Telecom Industry LeadTelecommunications & Media Industries IBM Global Business Services IBM Institute for Business Valuem_cavestany@es.ibm.com robertfox@usnl.ibm.com rob_vandendam@nl.ibm.com www.ibm.com/iibv © 2012 IBM Corporation