Amb 13 03-14 - Rob van den Dam - IBM

© 2014 IBM Corporation
Industry in transition
The customer-activated telecom provider
IBV Institute for Business Value
13 March 2014
Rob van den Dam
Global Telecommunications Industry Leader
IBM Institute for Business Value

The IBM Institute for Business Value (IBV) creates fact based
thought leadership that help clients realize business value
Future
Agendas
Value Realization
Studies
3 to 10 year industry outlook
with action oriented next steps
In-depth assessment of today’s
critical issues, opportunities, etc
CXO
Surveys
Chief Officiers studies – CEO,
CIO, CMO, CFO, CHRO, etc.
2

3
In addition, we conduct consumer surveys enabling us to compare
views from the ‘supply’ side and the ‘demand’ side

4
28
Middle East and Africa 30
Asia Pacific
Central and Eastern Europe
42
Western Europe
47
Japan
20
North America
16
South America
35
The 2013 CxO study covers 4,183 face-to-face conversations with
CxO’s in 70 countries – 218 of them from the Telecom industry
4
Telecommunications distribution
Source: Question E–Participant Country; Telecommunications n=218

5
Most telecom CxOs recognize they don’t understand their customers
well today, but they expect to get much better on this in the future
5
High level of customer understanding
180%more
84%
30%
84%
3–5 Years
30%
Today
“It is key to lift the insight to customer
behavior and upgrade the capability of
quick responsiveness to customers’
demand.”
CEO, Telecommunications, China
Source: Question C1–How well do you understand your customers today?; Telecommunications n=208
Question C8–How well do you think you will understand your customers in 3 to 5 years?; Telecommunications n=205

Many telecom CxOs recognize that customers already have a lot of
influence on their organizations
6
32%
6%
63%
63%
influenced to
a large extent
“The empowerment of the
Consumer is generating more
complexity. The mental model is
changing. We are facing a major
social transformation.”
CMO, Telecommunications, Brazil
Source: Question C4–How much influence do your customers have on your enterprise today?; Telecommunications n=207
Large extent
Some extent
Limited extent
Customer clout: customer influence on the enterprise

7
Close collaboration with customers is a clear ambition: nine out of
ten Telecom CxOs foresee doing so in the near future
7
Telecommunications CxOs plan to collaborate much more extensively with customers
132%more
88%
38%
88%
3–5 Years
38%
Today
“We focus on increased
collaboration with the customer to
understand their needs and
expectation.”
CMO, Telecommunications, Turkey
Source: Question B2–How strong is your collaboration with customers?; Telecommunications n=207

8
Yet half of the telecommunications companies in our sample have a
weak digital-physical strategy – or none at all
8
Source: Question B4–What kind of digital strategy does your enterprise have?; Telecommunications n=204
31%
19%
50%50%
have an integrated
digital-physical
strategy
“We plan to ensure the customer
is well understood, recognized and
served from any channel and via
any product: the 360 degree view
of the customer (web, shop, call
center, social network, etc.).”
CIO, Telecommunications, Russia
Integrated digital-physical strategy
Limited digital strategy
No digital strategy
Types of digital strategy

9
China
(1265)
Australia
(652)
Canada
(594)
Belgium
(323)
Brazil
(671)
Denmark
(319)
Egypt
(343)
India
(1038)
Finland
(309)
Greece
(738)
France
(1343)
Germany
(831)
Indonesia
(735)
Ireland
(351)
Mexico
(658)
Italy
(560)
Malaysia
(506)
Japan
(964)
Kenya
(322)
Netherlands
(548)
New Zealand
(464)
Russia
(1003)
Nigeria
(550)
Poland
(328)
Norway
(303)
Philippines
(877)
Saudi Arabia
(306)
South Africa
(649)
UAE
(320)
Spain
(809)
Turkey
(533)
Sweden
(354)
Thailand
(616)
UK
(657)
US
(1083)
To understand the consumers’ point of view we surveyed - in Q4’13 /
Q1’14 - close to 22,000 consumers in 35 countries
These countries account for 67% of the worlds population and 84% of global GDP

Electrical appliances
Holidays/vacations
Food & drinks
Clothing
10
Mobile Broadband
Transportation
Pay television
Utilities
Elect.
Appliances
Holidays
Food & drinks
Clothing
Going out
Sports
Fixed Broadband
Mobile Phone usage
-4%
-7%
-7%
-8%
-10%
-14%
-15%
-16%
-18%
-18%
-19%
-25%
-32%
Mobile Telephony
Sports
Going out
Mobile broadband
Net Decrease / Increase
Pay television
Fixed Telephony
Transportation
Fixed Broadband
Utilities
Net Decrease / Increase
Fixed Telephony
Source: 2014 IBM Global Telecom Consumer Survey,
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?
-15%
average
20%
18%
14%
14%
11%
10%
3%
3%
2%
-6%
-9%
-13%
-6%
Consumer sentiment in the Netherlands is extremely negative, also for
spending on telecommunications
+5%
global
average

91%
48%
82%82%
74%
54%
63%
25%
45% 44%
33%
36%
27%
13%
21%
10%
16%
31%
14%
7%
InstantMessaging/
CHAT
EMAIL
SOCIAL
NETWORKING
INTERNETVIDEO
streaming/download
MOBILEvoicecalls
MOBILEmessaging
(SMS,MMS)
MICRO-BLOGGING
Voiceover
INTERNET
FIXEDVOICEcalls
VIDEOCALLING
Generation below 25
Generation above 25
11
of generation below
25 use Instant
Messaging/Chat
daily to
communicate with
others
91%
Source: 2014 IBM Global Telecom Consumer Survey, How often do you use each of the following communications services?
Daily usage
Instant messaging and Social Networking have become key channels
to communicate with others

12
37%
21%
37%
5%
Significantly
Reduce(d)
Moderately
Reduce(d)
Increase(d)
No
Change
of respondent said
they have reduced –
or will reduce – SMS
usage by increasingly
using alternative
messaging channels
58%
15%
22%
58%
5%
Significantly
Reduce(d)
Moderately
Reduce(d)
Increase(d)
No
Change
of respondent said they
have reduced – or will
reduce – traditional voice
calling by increasingly
using alternative voice
channels
37%
SMS USAGE Traditional VOICE CALLING
Source: 2014 IBM Global Telecom Consumer Survey, To what extent have you reduced – or will you reduce - the following by using alternative channels?
Because of these new OTT channels, many respondents said they ‘ve
decreased - or will decrease - spending on traditional communications

13
15% 16% 68%
13% 19% 68%
13% 19% 68%
26% 27% 47%
30% 28% 43%
41% 28% 31%
60% 22% 18%
57% 30% 13%MOBILE PHONE
LAPTOP / NETBOOK
Desktop PC
TABLET
Internet-enabled TV
OTHER (e.g. Internet-
enabled Blu ray player)
GAME CONSOLE with
Internet connection
eReader
Very Valuable Moderately valuable Little valuable / Not applicable
of respondents
identifies the mobile
phone as the most
valuable device
57%
Source: 2014 IBM Global Telecom Consumer Survey, How VALUABLE are the following devices for you to access the Internet?
How valuable is each of the following devices for you to access the Internet?
The mobile phone has become one of the most valuable devices to
access the Internet

14
51% 49%
58% 42%
63% 37%
70% 30%
74% 26%
75% 25%
77% 23%
79% 21%
80% 20%
81% 19%
83% 17%
83% 17%
83% 17%
84% 16%
86% 14%
86% 14%Track usage & get detailed bills
Pay bills & recharge accounts
Status checks
Contact history
Information on buy products
Dealer/retail store location enquiries
Set alerts & limits
Know outstanding bills/amounts
Get offers customized for you
Change administrative information
Info on comms products/services
Know current plan / change it
Registration
Start/stop subscription services
Best plan based on your usage pattern
Raise service issues & track them
Self Service Human interaction (live agent)
Source: 2014 IBM Global Telecom Consumer Survey, Please indicate your preference for either self service or human interference (live agent)?
In the Netherlands, for the vast majority of touchpoints, customers
increasingly prefer to help themselves

15
5%
6%
7%
8%
10%
11%
31%
32%
IMPROVEMENT CUSTOMER CARE
IMPROVEMENT EXISTING
Product/Service
DEVELOPMENT NEW Product/Service
FEEDBACK on COMMUNICATION to
market
FEEDBACK on Overall STRATEGY
DEVELOPMENT of New CAMPAIGN
IMPROVEMENT of Existing CAMPAIGN
Other
57
%
43%
Like to
interact
with their
provider
to help
them to
improve
of respondents like to
interact with their
provider on improving
customer care
32%
On which topics do you want to communicate with your Telecom Provider to help the organization toimprove?
Not
interested
Topics customers are prepared to communicate on with their provider
In addition, the majority of respondents said they are willing to provide
feedback or engage with the telecom provider to help them to improve

16
5% 20%
6% 24%
8% 32%
11% 36%
17% 43%My Telecom Provider allows me MULTIPLE
WAYS to interact and communicate with them
My Telecom Provider USES THE INFORMATION
it already has about me rather than asking me to
provide it repeatedly
My Telecom provider LISTENS TO ME and
collects the right amount of information to meet
my communication needs
My Telecom Provider enables me to provide
FEEDBACK or to provide input to develop new
communication products and services
My Telecom Provider uses SOCIAL MEDIA in an
effective way to engage with me
Strongly agree Moderately agree
of respondents
agree that CSPs
use Social Media
in an effective way
to engage with
them
Only
25%
Indicate to which agree/disagree with the following statements on your Primary Telecom provider?
But telecom providers don’t yet get social, only a quarter of consumers
feel their provider uses social media effectively to engage with them
How good is your primary telecom provider in interacting with you?

17
5% 45% 50%
6% 48% 46%
7% 52% 40%
9% 56% 34%
14% 57% 29%
8% 65% 27%
22% 57% 22%
14% 68% 18%
10% 74% 16%
26% 60% 14%
30% 58% 11%
37% 53% 10%My Bank
Health care organizations
My Insurance Company
My primary TELECOM PROVIDER
My electric/gas utility provider
Government, including local authorities
My Pay-TV provider
My Grocery Retailer
Physical Retail Stores
Online stores (e.g. eBay)
Internet Information Providers (e.g. Google)
Social Networking sites
Most Trusted Moderately Trusted Least Trusted
Source: 2014 IBM Global Telecom Consumer Survey, Who do you rust most to manage your personal information or manage your privacy?
of respondents trust CSPs to
some degree – but only 10% to
high degree - to manage their
data and privacy
84%
Who do you trust most to manage
your personal information/privacy
With respect to trust to manage private/personal information, Dutch CSPs score rather well in
comparison to other providers
4

18
6% 22% 43% 13% 16%
46% 22% 25% 3%4%
28% 18% 34% 15% 5%
33% 31% 29% 4%3%
36% 30% 28% 3%3%
29% 30% 33% 5%3%
32% 29% 31% 3%5%I like to be INFORMED about the personal information
telecom provider GATHERS and stores
I like to RESTRICT the personal information telecom
provider are allowed to GATHER and store
I like to be INFORMED about what telecom provider is
DOING with personal information
I Like to RESTRICT what telecom provider can DO with
personal information
I HAVE a PROBLEM when provider shares personal
information with THIRD PARTIES
I like to BE ASKED to give permission for the personal
information that provider can share with THIRD
PARTIES
In this INTERNET AGE, I expect to have to disclose
personal information in order to get personalized
services
Strongly Agree Mod. Agree
Mod. Disagree Strongly Disagree
Source: 2014 IBM Global Telecom Consumer Survey, To what extetnt do you agree with the following statements?
of respondents like to be
asked to give permission to
share personal information
with 3rd
parties
68%
Even in this Internet of age, people like to be in control, and to be
informed, on the personal data CSPs gather and what they do with it

19
14%
8%
14%
16%
17%
19%
36%
35%
28%
51%
36%
60%
64%
76%
Internet search
Recommendations
friends/family
Social Media
CSP websites
Retail stores
Traditional
advertising
CSP emails &
promotional offers
Above 25
Below 25
What are your preferred sources of information when you are evaluating telecom providers and their products/services?
of under 25s access
Social Media to
evaluate telecom
providers and their
products /services
51%
Sources of information on telecom providers and their products/services
Internet search, Friends/Family and Social Media are now the preferred
sources of information when evaluating CSPs & their products/services

20
8% 57% 35%
12% 38% 50%
12% 42% 47%
12% 55% 33%
21% 58% 20%
24% 55% 21%
25% 62% 13%
28% 53% 19%
33% 51% 16%
33% 56% 11%Would TELL OTHERS about the bad experience
START considering COMPETITIVE services from other providers
Would DISCOURAGE OTHERS to use this provider
Would COMPLAIN to my telecom provider
Would STOP making PURCHASING from my provider
Would use the services of my provider LESS FREQUENTLY
Would NEVER USE my telecom provider again
Would post a NEGATIVE REVIEW or comment ONLINE
Would COMPLAIN on SOCIAL MEDIA
NO CHANGE in behavior
Always/Often Regularly/Possibly/Sometimes Never
Source: 2014 IBM Global Telecom Consumer Survey, What would you do in case of a NEGATIVE expereince with your telecom provider?
Indeed, after a NEGATIVE experience, consumers are likely to tell others,
discourage them to use the provider, but don’t complain to their provider
of respondents will tell others –
always or often – about
NEGATIVE experiences33%
Responses in case of
negative experiences

21
40%
38%
35%
16%
16%
13%
5%
Believe
contacting will
NOT MAKE
ANY
DIFFERENCE
Have to WAIT
TOO LONG in
the queue to
speak to call
center agent
TOO MUCH
HASSLE to get
through to
customer
service
NETWORKS
UNRELIABLE
so always
expect service
to be variable
Customer
service NOT
COMPETENT
to solve my
problems
My provider
CHARGES for
calls to call
center
Don't know
how to contact
service
provider
Source: 2014 IBM Global Telecom Consumer Survey, If you not complain to your provider in case of a negative experience, what is the reason?
of respondents say they never
complain to their provider in case
of a negative experience because
they believe it will not make
any difference
40%
Reasons of not complaining
in case negative experiences
If they are not complaining to their provider, the main reasons are they
believe it makes no difference, have to wait too long or it’s too much hassle

22
16%
18%
20%
23%
26%
32%
41%
44%
BEFORE BUYING when the provider provides information
When contacting my provider for RESOLVING AN ISSUE
BEFORE CONSIDERING the telecom provider
(REPUTATION)
On first purchase or BEGINNING OF SERVICE
Close to the END OF SUBSCRIPTION period
When I CONSIDER SWITCHING to a competitor
On receiving FIRST INVOICE
When my provider PROACTIVELY ask for my experience
Source: 2014 IBM Global Telecom Consumer Survey, What are the key moments in interacting with your telecom provider that matters to you?
For one third of respondents, word-of-mouth reputation is key before
even considering buying from a telecom provider
of respondents say word-of-mouth reputation of the telecom provider is
key before even considering the telecom provider for buying
products/services32%
Key moments of interaction that matter

Two-out-of-five consumers will not buy/subscribe from a telecom
provider because of discouragement by friends and family
23
7%
25%
29%
37%
39%
46%
53%
54%POOR CUSTOMER SERVICE / experience in
the past
UNCLEAR service OFFER or expectation
setting
NOT GETTING ANSWERS to key questions
DISCOURAGEMENT FROM FRIENDS based
on experience
Too COMPLICATED sign up or PURCHASE
PROCESS
REVIEW/RATINGS on experience from other
customers
Not able to interact via CHANNEL OF MY
CHOICE
Other
will NOT BUY/ subscribe
from a telecom provider
because of
discouragement by
friends and family
39%
of respondents will NOT BUY/
subscribe from a telecom provider - or
ABANDON a purchase - because of
poor service/experience in the past54%
Reasons not to buy/subscribe
from a telecom provider
Which of the following REASONS will cause you NOT to buy/subscribe from a telecom provider or to ABANDON a purchase

24
6%
6%
16%
20%
21%
23%
32%
35%
43%
67%
Providing HIGH QUALITY/compelling products/services
Resolving issues FAIRLY
Giving QUICK effective responses to questions/issues
LOW PRICES even at the cost of quality/service
Giving EXCLUSIVE offers (loyalty program)
Providing TRANSPARENCY & openness
PERSONALIZED & consistent service
ENABLING CUSTOMIZATION of products/services
SEEKING OPINION to develop product/services
PROACTIVELY trying to improve user experience
Source: 2014 IBM Global Telecom Consumer Survey, What are the most important aspects for you to STAY LOYAL to your telecom provider?
Providing high quality and compelling products/services is the most important
aspect in creating loyal customers
of all respondents say that getting high
quality and compelling products/
services is key for them to stay loyal67%
Most important aspects to
stay loyal
(all Dutch respondents)

Advocates
25 Source: 2014 IBM Global Telecom Consumer Survey, What are the most important aspects for you to STAY LOYAL to your telecom provider?
2%
8%
18%
29%
21%
21%
27%
53%
58%
79%
Providing HIGH QUALITY/compelling products/services
Resolving issues FAIRLY
Giving QUICK effective responses to questions/issues
LOW PRICES even at the cost of quality/service
Giving EXCLUSIVE offers (loyalty program)
Providing TRANSPARENCY & openness
PERSONALIZED & consistent service
ENABLING CUSTOMIZATION of products/services
SEEKING OPINION to develop product/services
PROACTIVELY trying to improve user experience
of advocates say that getting high
Quality/Compelling Products is key
for them to stay loyal77%
Most important aspects to
stay loyal
(for advocates)
Advocates seems to give even higher importance to compelling
products, resolving issues ‘fairly’ and getting quick responses

26
Customer advocacy is very low in the telecommunications industry.
The Netherlands score low with only 17% advocates
Which of the following Loyalty statements Recommendation, buying, staying intent about your provider do you agree/disagree with?
36%37%40%
46%
19%
27%
39%
28%
34%
40%40%
47%46%
52%
35%
45%
51%
46%
52%
56%
44%44%
48%
53%52%54%
31%
37%
56%
63%
44%47%
36%35%
33%
27%
55%
46%
37%
49%
43%
39%39%
34%
28%
47%
37%
31%
36%
30%
27%
39%38%
35%
31%32%31%
55%
49%
30%
24%
44%41%
28%28%27%27%26%26%24%23%23%21% 20%20%19%19%19%18%18%18%17%17%17%16%15%15%14%14%14%13%12%12%
32%
21% 21%
0%
20%
40%
60%
80%
100%
SouthAfrica
Germany
Russia
Denmark
Egypt
India
Mexico
Philippines
Turkey
Finland
Indonesia
Norway
Poland
Sweden
China
Belgium
US
Italy
NewZealand
Australia
France
Greece
Netherlands
Ireland
Brazil
UK
SaudiArabia
Malaysia
Spain
Canada
Thailand
UAE
Antagonists Apathetics Advocates

CSPs, indeed, are not leaders by any customer measure, and
have a lot to improve
27
Customer Service No CSPs in Top 25
Net Promoter Score Telecom lowest among 7 industry groups
Customer Loyalty No CSP in Top 50
Customer Simplicity No CSPs in Top 50
Customer Experience No CSP in Top 100
Customer Satisfaction Wireless industry ranked 44 of 50 industries
Innovation No CSP in Top 50
Only one CSP in Top 100, O2 at #46Retail Experience
GlobalGlobalUSUS

28
Thank you
Rob van den Dam
Global Telecom Industry Leader
rob_vandendam@nl.ibm.com
www.ibm.com/iibv

Amb 13 03-14 - Rob van den Dam - IBM

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