Consumer Survey United States

IBM Institute for Business Value
February 2012

2011 Global Telecom Consumer Survey
Country Data for United States
Communications spending
priorities, perceptions,
expectations and attitudes of
today’s smarter consumer

© 2012 IBM Corporation


The digital revolution is changing the relationship between
Communications Service Providers (CSPs) and their customers

Consumers become
increasingly instrumented
The are using technology to get
information from a multitude of sources

Consumers become
increasingly interconnected
They are connecting with each other to
exchange information

Consumers become
increasingly intelligent
They have clearly defined expectations
of what they want
2 © 2012 IBM Corporation


Consumers are becoming smarter and have new avenues to connect
with each other to influence large corporations, including CSPs

12/29/11 Press Release:
“Starting January 15, a new $2 payment
convenience fee will be instituted for
customers who make single bill
payments online or by telephone”

Within 24 hours, more
than 100,000 people had
Greetings, signed a online petition:
I am disappointed to learn that Verizon Wireless
plans to institute a new $2 fee for paying bills
online…. Your company should not assume that
it can do anything to your customers and that we
will allow it to happen…

12/30/11 Press Release:
“Verizon Wireless has decided it will not institute the
fee for online or telephone single payments that was
announced earlier this week.
The company made the decision in response to
customer feedback about the plan…”


To evaluate the impact of the age of consumerism the IBM Institute
for Business Value 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)



CSP CMOs indicated they feel underprepared particularly in areas that
are 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 3
70
3 Social media
10 4 Data explosion
9
5 Decreasing brand loyalty
11 5
6 1
7 6 Shifting consumer demographics
60
7 ROI accountability
2 8 Regulatory considerations
4
8 9 Emerging market opportunities
7
50
11 10 Financial constraints
12
11 Privacy considerations
Factors impacting
marketing 12 Corporate transparency
40 Percent of CMOs selecting
Telecom (CSPs) as ‘Top five factors’ 13 Global outsourcing

0 20 40 60 Mean

Source: 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?
5


To understand consumers’ attitudes towards CSPs in the world of today
IBM conducted a survey of over 13,000 consumers in 25 countries
Mature Emerging

B
R
France UK US Brazil Russia
I
C
Greece Italy Japan India China

South Korea Portugal Australia Czech Republic Poland

Netherlands Spain Sweden UAE Mexico

Belgium Germany Canada South Africa

6
Cyprus © 2012 IBM Corporation


The survey covered many topics, including spending priorities, service
adoption trends, customer advocacy and adjacent market opportunities

Customer Spending Customers’ Adoption of, Customer Sources of
priorities for 2011 – Experience with, comms Information for communi-
2013 products and services cation products/ services

Customers’ Attitudes Customer Advocacy Adjacent Market
towards Comms Providers and Antagonism Opportunities


More than 100 slides describe the characteristics of US consumers
in their perception of CSPs and their products and services

Customer Spending Customers’ Adoption of, Customer Sources of
priorities for 2011 – Experience with, comms Information for communi-
2013 products and services cation products/ services

Customers’ Attitudes Customer Advocacy Adjacent Market
towards Comms Providers and Antagonism Opportunities

1241 respondents were drawn from across the US and subscribe to
at least one service from a wide range of service providers
US : 1241 Proportion of sample identifying one of the providers
respondents; 12.2% of below as their Primary Communications Provider
total sample (weighted
distribution 22.4%) 31 % 29 %

8% 7%

7% 6%

4% 3%

2% 2%

*Services are
 Fixed telephony (landline)  Mobile/Wireless Broadband
 Mobile Telephony  Pay TV (Cable, Satellite, IPTV) 1% 1%
 
Fixed Broadband (Cable, DSL, FTTx)- Internet Telephony



Some Results


As in most mature markets, more than less consumers in the US
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 MOBILE Telephony
(Voice, SMS, etc) (2012 – 2014)
Emerging
Markets

Netherlands
Germany
Czech R.

Australia
Canada.
Portugal

Belgium

Sweden
45%
Greece
Net 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 MOBILE Broadband
(2012 – 2014)
Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372


US consumers are increasingly using over-the-top internet
communication services
Daily
Usage
1 Mobile Telephony 80%
2
3
Email/IM/Chat

Social Networking
73%
65%
65%
of under 25s use
4 Video Streaming 46% social networks
UNDER 25s 5 Fixed Voice 31%
daily

6 VoIP 15%

1 Email/IM/Chat 72%
2 Mobile Telephony 65% 46%
3 Fixed Voice 47% of under 25s with
Internet stream or
4 Social Networking 41%
download video
ABOVE 25s 5 Video Streaming 19% daily
6 VoIP 7%

Source: 2011 IBM Global Telecom Consumer Survey, US N=1241 S06 How often do you use the following communications services?

About half of the consumers access rich content/media services on
a daily basis, claim to do that via mobile devices
High
Q08. Which of the following do you use to access the media/content services
Media/Content
in the last question users
100% 4% 4% 3% 3% 4% 4% 2% 2% Other smart phone
6% 6% 4% 7% 7%
7% 6% 6%
7% 7% 8% 8%
8% 7%
5% Android device
5% 6%
80% 4% 6% 6% 6% 7%
11%
13% 12%
14% 15% 14% 12% Blackberry
16%

60% 20%
18% 18%
18% 17% 18% 20% Tablet PC
17%

40% iPhone

48% 48% 49% Laptop/Netbook via
46% 45% 43% 44% 44% Mobile Broadband
20%
Via Fixed
Broadband
Fixed
0%
Online Live video User Online Online Online TV Full movie
audio broadcast generated Music News sports Programs
content video video clips video clips videos

Source: 2011 IBM Global Telecom Consumer Survey, USA N=1241

Almost three-fourth of American consumers do NOT complain
to their CSP when disconnected from the network
Do you ever complain to your service provider when you are disconnected
from the network during a conversation, a voice call or internet session?
100%

90% 25%
33% 31%
80% 38% 35% 35% No
45% 44%
50% 48% 48% 47%
54%
70% 59% 57% 56%
63% 61% 61% 60%
67% 67%
71% 69%
60%

50% Yes
40% 75%
67% 69%
30% 62% 65% 65%
55% 56%
50% 52% 52% 53%
46%
20% 41% 43% 44%
37% 39% 39% 40%
33% 33%
29% 31%
10%

0%
Mexico
USA

UAE
Italy
Germany

India
Japan
Australia

Greece
South Africa
UK

Netherlands

Poland

Spain

Korea
France

China
Russia

Brazil
Sweden
Canada

Czech
Portugal

Belgium


One third of consumers find it too much hassle to get through to
the call center, another 1/3 don’t believe it make any difference
Q12 Why do you not complain to your service provider when you are disconnected from
40% the network during a conversation, a voice call or internet session?

Reasons for NOT complaining
30%

20%
32% 33%

10%
11% 13%
7%
1% 3%
0%
Telco Don't believe it Too much Have to wait My Provider My Provider is Don’t know
networks make any hassle to get too long in charge for unable to how to contact
unreliable, difference through to the queue to calls to Call resolve my my Provider to
variable Call Centre speak to Call Centre problems complain
service Centre
expected
13 % believe that it will take too long to
reach the call center

15 Source: 2011 IBM Global Telecom Consumer Survey, USA N=1241 © 2012 IBM Corporation

However, the majority of consumers exchange these
experiences with their friends/family
Q10. What happens when you are disconnected from a mobile, landline
or broadband during a voice call or when accessing the Internet?

What happens when being disconnected?
Attempt to re-dial/re-connect 47% 45% 8%
92%
Attempt Redial/
Avoid providers with whom friends/family had a
poor experience
21% 58% 21% Reconnect

Tell friends/family about my poor experience 12% 60% 28%
72%
Tell friends/family
Contact Customer Service 5% 38% 57% about their poor
experience

My Provider proactively contacts me in case of
6% 27% 67%
poor network experience
79%
Avoid Providers with
Switch network providers - e.g. replacing SIM 4% 25% 71% poor experience

Always Most/Sometimes Never


Family/Friends and Internet search - and for under 25s 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?

53%
Recommendations/ advice 56%

53%
Internet search 51%

32%
Social media 17%

31%
Websites of communication providers 31%

28%
Retail stores 24%

17%
Traditional advertising 22%

11%
Emails/ promotional offers 13% Under 25s
All Ages
7%
Shopping portals/ auctions 5%

Source: IBM Institute for Business value 2011 IBM Global Telecom Consumer Survey, USA N=1241
17 Question: What are you preferred sources of information when you are looking for communication products and services? © 2012 IBM Corporation


CSPs should focus on this new trend and mine digital channels, such
as 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.


Bharti Airtel understands how important it is to participate in the
digital 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.
Source:http://www.buzzom.com/2011/07/airtel-adopts-social-media-strongly-customers-can-live-chat-in-facebook-and-orkut/
19 http://telecomtalk.info/airtel-impact-on-social-media/51645/ © 2012 IBM Corporation


To establish a stable or growing market share, or to improve margins,
CSPs should focus on customer binding

In a world where people
• are becoming increasingly informed, empowered
and demanding
Key Questions • trust family, friends and peers more than their CSP
• have a wide range of providers to choose from
how can CSPs

Improve Customer Binding?
• What does a true Advocate look like?
• How valuable are they?
• Which elements of the customer experience are
most important to consumers?
• How well is the CSP positioned when it comes to
being focused on what the customer wants?
• How can providers use Advocacy to drive growth
and customer loyalty?


A new approach for Customer Advocacy:
Customer Focused Insight Quotient (CFiq)

The Net Promoter Score (NPS) is the traditional measure of word of mouth
NPS advocacy. The score is calculated by simply asking consumers on a scale of 1 to
10 their likelihood to recommend a specific company or brand.

The IBM Customer Focused Insight Quotient (CFiq) utilize an approach that looks
at key client perceptions and organizes them in a manner that captures more than
demographic or behavioral data. Using statistical analysis and multiple regression
CFiq techniques it isolates predictive attributes that are highly correlated with positive
commercial behaviors. The CFiq measures the level of advocacy of a customer by
analyzing customer responses to three key statements as stated in the next slide.

CFiq categories:
– Advocates: loyal clients who refer new business, consolidate more of their
portfolios with their primary provider, and resist competitive offers
– Antagonists harbor negative opinions about their provider, and potentially will
bad-mouth the company
– Apathetics: could be described as those who show no strong feelings either
way, and may be prime candidates to “sweeten” into advocacy. Or, they may
leave their firm if a more appealing option comes along.


A consumers’attitude is shaped by cumulative experience and
directs future behavior and suggestions for improvement
Consumer Attitude

Advocates Apathetics Antagonists

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 services



Understanding who is an Advocate and who an Antagonist, and why,
is important for driving growth and improving customer retention

Advocates have a higher
“I have recommended my Higher
wallet share and are highly
provider to several people” Shareholder
Value complimentary of the
“They have amazing customer
service”
provider capability
“They are more expensive but
I hardly get disconnected or
have calls dropped” Advocates Apathetics are generally
Apathetics
passive participants
susceptible to competitor
offerings
“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
Shareholder support costs and are
provider offering cheaper rates” Value prone to bad-mouth the
provider



US CSPs have too few advocates and too many antagonists,
though a bit better than the global average
100%
4% 4% 3%
9%
13%
19% 17% 17% 17% 17% 16%
22% 20% 19% 20% 19%
26% 25% 24% 23% 19%
36% 34% 25%
80% 22%
14%
19% 25%
14% 16% 20% 23% 23% 25% 22% 56%
26% 31%
21% 23% 29% 36%
Advocates 60%
Apathetics 17%
18%
22% 25%

40% 77%
Antagonists 70% 69% 71%
62% 61% 64% 62%
60% 53% 52%
59% 58%
55%
58% 57% 60%
52%
49% 49%
46%
20% 39% 41%

0%

Canada
Netherlands

China
Japan
Germany

Australia
South Korea
Czech Republic

Brazil
Portugal
Mexico
Spain

Poland
France
Russia
Sweden
South Africa

Belgium
UK
US

Italy
Greece


CSPs do not account for the extreme gap in emotive attributes
of their customer base
Advocates Gap Antagonists
% strongly agree % strongly agree
79% Values me as a customer 28%

80% Offers me relevant products and services 31%

79% Displays consistent level of knowledge 33%
Listens and collects information necessary to meet
76% 32%
communication needs
76% Prompt correction of errors when they occur 34%
Give the CSP Find
credit for 78% Does not request for existing information repeatedly 38% fault
doing with
“everything” 66% Resolves problems fairly 26% “everything
right ” CSP
69% Listens and proactively follows-up on issues 30% does

67% Provide advice to improve my user experience 28%

71% Allows me to customize products and services 33%

87% Allows multiple ways to interact with them 52%
Seeks input to develop new communication
45% 17%
25 Products/services © 2012 IBM Corporation


The survey did uncover a number telecom-enabled services majority
of consumers are willing to use /pay for
Retail/Shopping Banking/Insurance Healthcare

#1 all consumers
Nbr 1: Receive Mobile Nbr 1: Location-based Nbr 1: Reminders for
coupons/Discounts (40%) insurance claims (45%) medications/appointments (49%)

Public Services Travel & Transport Utilities

Nbr 1: Find nearest public/ Nbr 1: Geolocalization (46%) Nbr 1: Receive warnings about
government offices (38%) weather condition (46%)

February 2012

Contacts

Bob Fox Rob van den Dam
Global Telecom Industry Leader Global Telecom Industry Lead,
Global Business Services IBM Institute for Business Value
robertfox@us.ibm.com rob_vandendam@nl.ibm.com

WWW.IBM.COM/IIBV


Consumer Survey United States

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