Ar fixed a4_0107

How to generate customer loyalty in fixed markets

Acquisition and Retention Study, March 2009Global Summary Report

How to generate customer loyalty in fixed markets2

Contents

3 Executive summary

4 Objectives and methodology

5 Churn damages profitability

5 The threat of customer churn: low customer lifetime value

7 Most customers would consider another service provider

8 People look to a variety of sources to inform their decisions

9 Brand “stickiness” is low

10 In mature markets most customers have churn experience

11 Churn triggered by promotional offers

12 Churn owing to dissatisfaction

13 Customer relations decline most strongly between one and three years

14 What makes a loyal customer?

16 Internet quality, costs and customer service boost customer retention

17 Service and device portfolio

18 Network and service quality

19 Cost and billing

20 Customer care

21 Challenges and opportunities for CSPs

23 Customer insight holds the key

How to generate customer loyalty in fixed markets 3

As a rule of thumb, decreasing the level of churn by 10 percentage points increases the EBITDA margin of communications service providers (CSPs) by 10 percentage points or more. Customer acquisition and retention is therefore fundamental to the profitability and ultimate survival of CSPs, especially since the growth of customers and subscriptions is slowing in most markets for fixed Internet and telephony services. The good news is that the existing provider is in an ideal position to influence customer loyalty by delivering an excellent performance.

The Nokia Siemens Networks acquisition and retention study asks two key questions. What kind of customer experience has to be provided to manage churn? And how can CSPs build a sustainable competitive advantage, apart from running short-term promotions?

Customers are pragmatic. They increasingly see different CSP offers as interchangeable and most will churn if they see an advantage. Willingness to churn increases with the maturity of the market, and a CSP’s performance is more important for most customers than brand image.

Recent churners say they decided to switch because of dissatisfaction with their existing services, promotional offers from competing providers or both. They are most likely to churn at between one and three years, probably at the end of a 12 or 24-month contract.

CSPs therefore need to work on satisfying their customers better. The survey identified four key areas:1) Cost and billing as most critical area, with contract conditions and pricing

structure at the top of the list of subscriber complaints. Customers want transparent, flexible contracts, combined with clear billing.

2) Network and service quality which is dominated by the perception of Internet speed.

3) The service and device portfolio, with a fast and trouble free service activation being the most critical point. People also want tailored service bundles that fit their needs more closely.

4) Customer care, where people are looking for a fast resolution of any problems and clear information about the status of any enquiries. Subscribers are looking for a “service champion”.

Armed with the right customer insights, CSPs can continuously optimize the individual customer’s experience and successfully reduce churn to a minimum.

Executive summary


Nokia Siemens Networks carried out the acquisition and retention study to explore the customer experience in both the mobile and fixed telephony and broadband markets. This document focuses on the fixed markets.

In order to get a worldwide view about the customer experience under different market conditions, the sample consists of mature markets, which have already experienced heavy shifts in the CSP’s market shares, as well as highly competitive emerging markets.

The study is based on nearly 12,000 interviews and is representative for the markets in which it was carried out, which were Brazil, China, Germany, Indonesia, Pakistan, Russia, South Africa, UK and US.

The key topics are:• What are customers’ key reasons for selecting specific service providers?• What does this decision-making process look like? Who (which people) and/or

what (which facts) have the biggest influence?• How likely are customers to switch CSP and what are their reasons for

churning?• How satisfied are consumers with their current service providers and what

influences their satisfaction?• What can CSPs do to increase customer loyalty?

Mobile sample

Field period: 12/08 to 02/0911,866 interviews

Brazil

Fixed sample

Mobile sampleChina

Fixed sample

Mobile sampleUnited States

Fixed sample

Mobile sampleSouth Africa

Mobile sampleIndonesia

Mobile samplePakistan

Mobile sampleRussia

Mobile sampleUnited Kingdom

Fixed sample

Mobile sampleGermany

Fixed sample

Figure 1. The Acquisition and Retention study is based on nearly 12,000 interviews, covering nine countries.

Objectives and methodology


In most markets for fixed Internet and telephony services the growth of customers and subscriptions is slowing and may even be close to zero. Thus the competition for the existing customer base is becoming fierce. Retaining valuable customers is now mandatory for long-term business success. The costs of win-back in lost revenues and acquisition costs has put churn prevention and loyalty management at the top of the agenda for many CSPs.

Churn damages profitability

The threat of customer churn: low customer lifetime value

Figure 2. EBITDA margin is adversely affected by high rates of churn.

0%Blended churn rate, 2007

EBIT

DA

mar

gin

60%0%

30%

40%20% 50%30%10%

60%

20%

50%

10%

40%

There is a clear correlation between the level of churn and profitability because churn has a direct impact on the average customer lifetime value (CLTV). Put simply, it is expensive to recruit new customers and churn can prevent CSPs from recouping those costs and generating profit from subscribers. As a rule of thumb, decreasing the level of churn by 10 percentage points increases the EBITDA margin by 10 percentage points or more.


High subscriber acquisition costs are especially critical for CSPs in mature markets. Acquisition costs include different types of marketing costs, retailer commissions and subsidies for equipment such as modems, routers and set-top-boxes.

Churn also causes indirect costs, like the costs of promotional offers that are needed to attract new customers and pull them away from their current provider. The costs of migrating and activating a large number of new customers must also be considered, as must the costs of ending the churning customers’ services.

It is obvious that cancellations lead to future revenue losses, but an additional problem is that the time for up sells might be too short. For instance, the customer might take out a short contract for basic voice and broadband and then leave. The time available to sell additional value-added services such as TV and special content is probably too short if they were not included in the initial subscription.

High churn rates can endanger the required economies of scale in the network. For example, based on Ovum’s modeling of UK wholesale offerings, an LLU CSP must obtain approximately 300 customers per local exchange in order for the LLU investment to pay off.

The good news is that the “incumbent” provider is in an ideal position to influence customer loyalty by delivering an excellent performance. Best practice cases such as Iliad in France show that it is possible to achieve a churn rate far below 1 percent per month.


Only one in five customers on average say that their current provider is the only one they would ever consider. This loyalty indicator is lower in mature markets than in emerging markets. In the UK is it just 7 percent. The reasons are:• Customers are becoming more demanding and are willing to change their

provider to suit their personal preferences and experiences. They are very pragmatic.

• Customers increasingly perceive the available offerings as interchangeable.

Most customers would consider another service provider

Figure 3. Customer buying behavior – most customers consider not only their current provider. Customer loyalty today – the “incumbent” CSP is in permanent competition.

n=4229 respondents 2420

17

49

32

16

18

4434

71

9

50

25194

50

1628

14

42

14 27

11

58

Totalin %

The only provider I would ever consider It is my preferred provider, but not the only one I would consider

Just one of several providers I would consider Not a provider I will stay with in the future Don’t know

Germanyin %

United Kingdomin %

Brazilin %

2

United Statesin %

Chinain %


The experiences and recommendations of family members and friends is the most important source of information, especially in Brazil where nearly 70 percent rate it as the most important influence. This face-to-face communication is complemented by virtual information from the Internet, and roughly 70 percent of fixed Internet customers mention these two CSP-independent “neutral” information sources as the most important. This means that both the good and bad experiences of existing subscribers influence the buying behavior of potential customers.

On the other hand, the influence of contact with the CSP should not be neglected. Overall, 24 percent of customers perceive advertisements as one of the most important influencers and provider homepages are mentioned by 21 percent. Other channels are less influential, but TV and radio, call centers and the sales person all have their audience. So the quality of any and all of these interaction points may be critical to the buying process.

People look to a variety of sources to inform their decisions

Figure 4. People actively inform themselves about the best offer from a variety of sources. Most influencing information sources: Which of the following information sources influenced you the most with your decision for your current provider? Multiple answers.

n=681Base: customers who chose their Internet provider less than six months ago

Salesperson of the Internet company store

TV/Radio

Homepage of Internet company

Advertisements received

Call centre of the Internet company

Internet 31

40

21

24

13

14

26

68

9

25

8

27

Family or friends

in %Total Brazil

27

39

24

14

26

12

China

38

29

41

20

10

4

Germany

42

38

23

20

16

11

United Kingdom

26

33

14

36

7

12 7 20 16 6 12

14

United States


In mature markets, 20 to 25 percent of customers on average are satisfied with most of the core brand dimensions of their providers, such as reputation, innovation and customer care. Another 40 percent are merely “somewhat satisfied”. A quarter of customers claim that they identify with their provider’s brand more than with other CSPs and another 39 percent agree with this to some extent. So there is a hardcore of brand enthusiasts but the emotional link with the majority of the customers is rather weak, and fixed CSPs cannot rely on the strength of their brand as a key retention tool. Customers in mature markets demand real performance from their CSPs, not just a good image.

Brand “stickiness” is low

Figure 5. Brand “stickiness” is rather low.

n=2529

Don’t know

100806040200

Satisfaction with brand – developed countries (% of customers)

Has a good reputation

Is very innovative

Has a very appealing advertising

Is one that you like to be seen using

Is an Internet provider that I identify more with than with other brands

Is one that takes care of its customers

Cares a lot about environmental sustainability

Takes initiative in social and cultural life (charity, sponsorship)

On a scale from 1 = don’t agree at all to 10 = totally agree

3

8

8

8

5

3

39

37

6

9

9

6

9

9

6

7

19

27

25

22

23

22

20

20

46

36

38

42

39

42

23

25

26

20

19

23

24

24

12

11

Bottom (1–2) Middle (3–5) Middle (6–8) Top (9–10)


In mature and extremely competitive markets such as Germany, the UK and the US, most customers have already churned in the past, with 12 percent changing their provider within the previous six months. In emerging markets such as Brazil and China, the share of churners is much lower at 1 in 10. In short, the willingness-to-churn increases with the maturity of the market.

When asked why they churned, the recent switchers gave two main reasons:• Promotional and bundled offers from other providers. In the UK in particular,

bundling led to extreme shifts in the market shares of different players (Ovum, The Future of Fixed Broadband, 2008).

• Dissatisfaction with the previous provider’s performance.

The two reasons are sometimes linked, because dissatisfied customers will naturally be more receptive to competing offers.

In mature markets most customers have churn experience

8

34

1

57

Totalin %

Switched less than 6 months ago Switched more than 6 months ago Never Don’t know

1. Dissatisfied with my former provider

2. Interesting promotion offer

3 7

90

Brazilin %



27

91

Chinain %

1. Interesting promotion offer2. Friends/relatives recommended

to change

11 52

35

United Kingdomin %


2. Attractive bundled offer

12

55

32

Germanyin %



United Statesin %


2. Moved into another region

Recentswitches 12

Recentswitches

150

37

12Recentswitches

Recentswitches

Recentswitches

Recentswitches

Figure 6. In mature markets most customers have churn experience. Churn behavior and its motivation – top two.

n=4229


In mature markets such as Germany, the UK and the US, between 19 and 42 percent of recent churns were motivated by the promotions of competing CSPs. Churn will not be significant if the competing offer is perceived to be only 5 percent cheaper, but if the perceived price difference is 10 percent or more then the willingness-to-churn rises dramatically. This high price elasticity is a clear indication of the increasing interchangeability of the different offerings in the eyes of customers.

Churn triggered by promotional offers

>50Perceived cost savings (%)

5 10 20 30 40 50

Consider churn (% of all customers)Churn due to promotional offer from competitor (%)

Germany

GermanyUnited KingdomUnited States

Churners*All customers

United Kingdom**Churners*All customers

United States**Churners*All customers

*Within last 6 months**Attractive bundles of competitors is a strong churn trigger

4334

1944

2639

0

20

40

60

80

100

Perceived price differences of 10% or more trigger churn

Figure 7. The first half of the truth – around 40 percent of churn is triggered by promotional offers from competitors.


Dissatisfaction with a CSP’s performance is the strongest motivator for churn, with around half of recent churners in mature markets citing it as their main reason for switching. The reasons for dissatisfaction varied widely, but included the costs of Internet access, customer care service, connection stability, speed and rate packages.

Churn owing to dissatisfaction

GermanyUnited KingdomUnited States

706050403020100

Reasons for dissatisfaction of recent churners (%)

Cost of Internet access

5958

45

Customer care service

6252

41

Stability of Internet connection

5446

45

Down/upload speed

3146

43

Offered rate packages

3929

21

Billing15

2518

Contract conditions

2813

7

Quality of fixed telephony

218

13

Offered bundles5

811

Costs of additional (Internet) services

154

13

Quality of TV services

34

9

Churn due to dissatisfaction (%)

GermanyChurners*All customers

United KingdomChurners*All customers

United StatesChurners*All customers

*Within last 6 months

4449

5247

4436

Figure 8. The second half of the truth – customers churn due to dissatisfaction.


Across all the countries in the survey, the critical period when customers churn is between one and three years. This is largely because most Internet contracts last 12 or 24 months, so it seems that customers typically churn at the end of their contract period. The promise of lower costs, better customer care and superior Internet connection performance sounds good if the customer has not been pleased with the service they have received from their current provider.

CSPs can therefore defend themselves by creating specific offerings designed to retain customers who are coming to the end of their contract period. Because the early phase of a customer’s association with a CSP actually costs the CSP money (the customer’s payments are still offsetting the cost of acquiring the customer in the first place), it is a highly efficient use of resources to target customers whose acquisition costs have already been paid off. Understanding what drivers these customers are responding to and what their chief sources of dissatisfaction are is critical in deciding which actions to take to retain them.

Customer relations decline most strongly between one and three years

Time/customer lifecycle

Positive CLTV

Limited harvestingNegative CLTV

<= 1 month

< 2months

< 3months

< 6months

6 to 12months

1 to 2years

2 to 3years

3 to 4years

4 to 5years

>= 5years

Duration of customer relation (%)

Customer life-time value

TotalBrazilChinaGermanyUnited KingdomUnited States

Critical time window

0

20

40

60

80

100

Figure 9. Managing the customer lifecycle – strongest decline in the customer relationship occurs between one and three years.

Base: n=4229 respondents


Overall satisfaction with the provider’s performance plays the dominant role in the customer’s decision process. Other factors such as the brand image and switching barriers play minor roles.

The following figure shows the contribution of each satisfaction area to determine its relative contribution to overall satisfaction, expressed as a percentage. The numbers indicate the importance of the different drivers across the entire customer base. Of course, some specific customer groups may have different priorities.

What makes a loyal customer?

Figure 10. What makes a loyal customer: a 360° experience at all touchpoints.

n=2529

Customer care• Status info about inquiry

• Time to solve query• Competence of staff

Cost and billing• Contract duration, transparency & flexibility

• Personal fit of rate packages

• Cost of additional services

Service & device portfolio• Ease of installation• Technical support during activation

• Quality of hardware and software

Network and service quality• Speed while browsing• Download and upload speed

• Matching the promised speed

Momentsof truth

Activation

TV services

Bundling

Quality of Internet access

Contract conditions

Costs of Internet

Costs of telephony

Costs of TV services

Billing

Customer care

13

24

20

3116

12

41

8

16

Customer retention drivers – impact in %

Quality of telephony



In our analysis, we split the drivers of customer satisfaction into four key categories:

• Service and device portfolio: From the customer perspective, ease of activation for services is far more important than the portfolio itself. The dominant drivers are the ease of installation, the quality of support provided by the CSP and the quality of the hardware and software of the delivered modems, routers and set-top-boxes. The right bundling strategy is also important, including the availability and quality of TV services.

• Network and service quality: Quality is dominated by the perception of the quality of Internet access. The most important items are the browsing speed, the download and upload speed and whether the promised speed is achieved in real life. The upload speed is just as important as the download speed, thanks to changing user behavior in Web2.0, where people increasingly post their own content such as photos. The quality of telephony is less of a concern, provided certain minimum requirements regarding voice quality and features are met. TV quality is not a strong factor as yet, partly because of low penetration.

• Cost and billing: Customers place a high importance on contract conditions. The contract duration, the transparency of the conditions and the ability to change the service bundle and rates are all important to their satisfaction. Furthermore the personal fit of the Internet rate package and the cost of additional items should be taken into account. It is not just about the offered price level, it is about the price structure of the provider and the ability to achieve a fit with the user’s personal preferences and usage pattern. On top of this, billing is very important, even in times of “simple” flat rates. The accuracy, understandability, delivery method and payment conditions of the bill, as well as the billing period, are all equally important.

• Customer care: Customers value the provider’s ability to solve any problems in a systematic and timely way. They want transparency about the status of their inquiry as well as a prompt solution. The perceived competence of the provider’s staff is monitored closely by customers, since it is also one of the few occasions when the customer has personal contact with the CSP.

Overall, cost and billing is the most crucial area for customer satisfaction, followed by network and service quality. The portfolio, including the activation process and the perceived performance in customer care are of nearly equal importance. It can be seen clearly that customers are not solely focused on price but on the price-performance ratio. The quality of Internet access is more important than the cost associated with it and the quality and price of telephony and TV are of nearly equal importance. Overall the portfolio, quality, contract conditions and care services all massively outweigh cost alone in the customer’s priorities.


In order to enhance customer satisfaction most effectively it makes sense to act in areas that are the most important to customers and where there is the biggest perceived room for improvement.

By comparing the previous results against the percentage of satisfied customers in each area, the areas of highest relevance and lowest satisfaction are: • Contract conditions• Quality of Internet access• Customer care• Costs of Internet usage • Activation process

Other areas may be less urgent, but they should not be ignored. Some may become more important in the future – TV is a good example here. In other areas, dropping below certain performance thresholds can attract negative attention from customers and thereby increase their impact on satisfaction, as well as the workload on the help desk. Still others vary in importance depending of the customer’s lifecycle phase. Bundling options might be of more interest as contracts come up for renewal, for example. In addition, specific customer segments have focal points that are different from those of the average customer.

Internet quality, costs and customer service boost customer retention

Figure 11. Internet quality, costs and customer service are the major levers to boost customer retention.

Note: Impact of single items adds up to 100 percent.

100%0%Satisfaction

% of satisfied customers

Impa

ct

60%0%

10%

40%

20%


Quality of fixed telephony

Customer care service

Costs of Internet usage

Contract

Costs of TV services Type of TV services

Bundled services

Activation process

Billing

Quality of Internet access

1916

4124


The activation process and bundling strategy call for special attention here. The service and device portfolio affects customer satisfaction at 19 percent in mature markets. Within that, the service activation process has the largest potential to enrich the customer experience. Activation is about the quality of hardware and software for customer premises equipment (CPE), installation and configuration simplicity and also about the time needed to keep everything running well. Interestingly, customers are especially dissatisfied with the technical support during activation, so providers could think about providing more personal assistance, even if this costs more. Since the impression of trouble free activation is crucial to overall satisfaction – and thus personal recommendations to potential new customers – activation support can be an effective customer touch point. Customer concerns regarding activation are understandable, since in some countries 20 percent of all phone and broadband lines are not installed correctly at the first attempt (Oliver Wyman 2007).

Next come the services themselves, including the quality of the content and value-added services. TV customers want better special interest packages beside the mainstream channel packages, as well as better value-added services such as video-on-demand, games and recording functionalities. Aside from the avoidance of churn, those areas also provide good upsell opportunities and the demand is there.

There is still unexploited potential in service bundling. People especially miss the value-add of a bundle beyond the price and the one-stop-shopping advantage. The fit of the bundle to their individual needs is crucial. Therefore more flexible and tailored bundling options offer possible competitive advantages for CSPs.

All in all, it is more important to the majority of customers that the basic Internet and voice products are made available quickly and easily than it is getting more sophisticated services.

Service and device portfolio

Figure 12. Service and device portfolio – activation process and bundling strategy need special attention.


16

4124

100%0%Satisfaction


Impa

ct

60%0%

10%

40%

20%

19

Need fit of services in bundle*

* Bundle customers only** TV customers only

Content quality and Value added Services

Activation

Quality of hardware

Number of channels**Time until access workedDelivery time of hard & softwareEase of installationNeed fit of setup package

Technical activation support

Quality of special interest packages**

Quality of VAS (VoD, games, PVR)**

Value add of the bundle (instead of separated services)*


Perceived Internet speed is the most crucial factor in service quality, which overall accounts for 25 percent of the customer’s quality perception in mature markets. Many users think that there is a gap between the bandwidth that was promised to them and the one they really get. Only 30 percent of the customers are satisfied with the fulfillment of the promise. In addition, satisfaction with the speed while browsing, downloading and uploading is below 40 percent. This is a clear sign that the demand for bandwidth is not saturated, even in mature markets with widespread ADSL and cable infrastructure.

In contrast to previous studies, changing user behavior in the context of Web2.0 is driving the demand for higher upload speeds, which calls the long-term suitability of strongly asymmetric technologies such as ADSL into question.

Security has also become a hot topic and now has a significant impact at low satisfaction ratings. Security solutions can therefore be an effective differentiator.

The quality of telephony is less critical, although satisfaction values below 60 percent indicate some room for improvement. One explanation for this might be the increasing penetration of VoIP. CSPs should avoid compromising on the voice quality and stability of calls, since voice as a basic service is not negligible for customer satisfaction.

Network and service quality

Figure 13. Network and service quality – perceived Internet speed is the most crucial factor.


16

41

19

100%0%Satisfaction


Impa

ct

60%0%

10%

40%

20%

* Bundle customers only** TV customers only

Internet quality

24

Stability of calls*

Clarity and sharpness of TV**

Availability and call setup time*

Stability of the Internet connection

Security solutions

Matching the promised bandwidth

Browsing speedDownload speed

Upload speed

Voice quality*


With a contribution of around 40 percent, cost and billing has the biggest impact of all on customer satisfaction. A certain dissatisfaction with having to pay for things is natural, so the point for the CSP is to increase satisfaction and differentiate in the market without compromising price levels and margins. The various relevant parameters can be grouped into contract conditions, pricing structure and billing.

About 30 percent of customers are satisfied with contract conditions such as duration, transparency and flexibility. Customers do not like tying themselves into something they might not find appropriate after a while, so there is an opportunity for more commitment-free contracts.

The pricing structure by nature is complex, but there are two key points where providers could match their offering more closely with their customers’ preferences. First, customers complain about the cost of hardware and technical assistance, which they rather take for granted. Second, they don’t like paying extra for additional items, such as value-added services, additional TV services and special content packages. As a consequence CSPs can gain competitive advantages with a revised bundling and upselling strategy.

Billing is very important to customers, even in times of flat rates, and around half of customers are satisfied. Therefore billing is not a critical issue, but providers might think about improvements, especially in making their bills easier to understand.

Cost and billing

Figure 14. Cost and billing – customers value improvements in contract conditions and pricing structures the most.


19

24

16

100%0%Satisfaction


Impa

ct

60%0%

10%

40%20%

20%

Delivery method of bill

Costs of HW (set-top box)

Voice: Line rentalOne time Internet activation costs

Monthly Internet costsVoice: Rate package in general

Personal fit of Internet rate packageSingle bill

Understandability of bill

Payment conditionsAccuracy of bill

Price of bundled servicesMonthly costs for TV

Costs of additional VASPromotional offers

Costs of additional TV services

Flexibility within contract period

Costs of technical assistance

Costs of HW

Period of contract cancellation

Contract conditions

Pricing structure

Billing

Costs of special content packages

41* Bundle customers only** TV customers only

Contract duration

Transparency of conditions


Customer care achieves low overall scores, and customers want faster problem solving and greater transparency regarding the status of their queries. The single most promising area for improvement is help line waiting times, which effectively means improving call center efficiency. If providers can speed up customer care processes by providing the necessary information and tools for their agents, they can differentiate in competition as a service champion. Friendliness is less important than a speedy resolution.

CSPs can also improve their Web sites, including customer self service facilities. For one in five customers the provider’s homepage is the most important source of information. Improving the quality of contact here and keeping customers up to date is a promising option to lower churn and stimulate upsells.

Customer care

Figure 15. Customer care – improvements in solving time and status transparency are key.


41

19

24

100%0%Satisfaction


Impa

ct

60%0%

10%

40%

20%

* Bundle customers only

Friendliness of staffManaging trouble with any of the bundled services

Achieved outcomeCompetence of staff

16

Time to solve query

Customer self service

Easy info access on website

Waiting times at helpline

Status info about inquiry


Customers are in search of a better experience when they churn. Any strategy that aims to improve the customer experience should therefore target resources at those areas that are most important to subscribers.

CSPs supply intangible products and they have low levels of personal interaction with their customers. Therefore the performance during the “moments of truth“ (Booz, Allen & Hamilton) is crucial. These are the moments in which the customer really experiences the quality of the service, such as activation, usage, billing and care. These points determine the quality of the relationship with the customer. Providing a superior and differentiated service that is adapted to specific customer needs is a competitive advantage that is hard for competitors to copy. CSPs have lots of opportunities to reduce churn by focusing their resources on managing these “moments of truth“.

1. Service and device portfolio

Greater flexibility and tailored service bundles can better match individual customer needs. Additional bundling options should include options that might previously have been perceived as add-ons, such as special interest content, video-on-demand, games, convenience features for TV usage, premium support and security.

Automating and simplifying the activation process, including device management, ensures timely and right delivery. Since trouble-free activation is of outstanding importance, high-quality technical assistance and proactive care is an option that ensures that this moment of truth does not lead to disappointment.

2. Network and service quality

The aim should be to improve the perceived Internet speed in a cost-efficient way. As the demand for bandwidth is not saturated, it is essential to bring the fiber closer to the curb or the building. The increasing need for upload speed calls for mass deployments of VDSL as symmetric technology. In addition, competitive access providers fuel their growth by boosting their share of unbundled lines, rather than just taking wholesale capacity, in order to remain in full control of the quality provided to their customers.

Security solutions are key differentiators and this should be pointed out in marketing messages.

In telephony, further improvements could be made in voice quality and call set up time, especially if VoIP services are provided.

Challenges and opportunities for CSPs


3. Cost and billing

CSPs have an opportunity to free up customers to enable easier migration between tariffs and bundles. One option is to let customers choose between monthly, bi-annual or annual subscriptions, for example. Despite the business risks associated with lowering the commitments placed on customers, there are already successful examples in the market, including German CSP Hansenet, which has successfully pursued this strategy.

Another chance to improve customer experience is to provide personalized top up management for content and value-added functionality. The challenge for CSPs is to offer choices of chargeable items for a wide target audience on top of static, all-inclusive, flat rate bundles. Charging on a flexible à la carte basis is therefore an option. Customers can for example choose single channels they would like to subscribe to and pay per channel. The customers’ perception is that they only pay for what they are actually using.

4. Customer care

CSPs can adapt customer care to different target segments and query types. This includes enhanced self-care options. It also provides an excellent means to boost efficiency using seamless information flow through an integrated systems infrastructure. This will reduce waiting times and solve queries “right first time”. This requires the arming of customer support personnel with all relevant customer and network information.

Care can be proactive, with end-to-end automation of customer care processes.

CSPs can position themselves as a “service champion“ in marketing communications, taking into account that fast problem resolution is often more important for the relationship with the customer than zero failure.


The ultimate goal is the “mass individualization” of CSP offerings – from service definition to customer care – as if they are designed for each customer individually. This requires great insight into individual behavior and preferences. This approach also allows early churn prediction so that appropriate retention measures can be taken in good time. Successful customer-centric CSPs liberate their customer information from data silos and bring it together so it can be accessed by all systems and different organizational units. In this way the individual customer’s experience can be continuously optimized and they are unlikely to churn.

Customer insight holds the key

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