Consumer Survey South Africa

© 2012 IBM Corporation

Communications spending priorities, perceptions, expectations and attitudes of today’s smarter consumer

2011 Global Telecom Consumer Survey Country Data for South Africa

IBM Institute for Business Value

February 2012


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

It is a brand new game

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


It’s no wonder that

we know so much

Instrumented

The consumers are becoming smarter …….

1,97 billion Internet users

worldwide in 2010 - 14%

increase since previous year

255 million websites - 21.4

million added websites in ’10

Mobile technologies has

increased 92% globally and is

still more widely accepted in

the growth markets

Over 300,000 iPhone

applications

± 60,000 iPad applications

A mass of conver-

sations, based on two-

way communication,

often without the provider

involved

VIRAL PRODUCE

ON A LARGE

SCALE

FAST

TWO-WAY

COLLABORATIVE

CONSUME

BLOGS

VIDEO

SHARING

WIKI’s

FORUMS

Interconnected

In 2010

152 million blogs on the Internet

25 billion tweets sent on Twitter

250 million new people on Facebook

SN and Blog sites:

Total minutes increasing 82% YoY

Average time per person increasing 67% YoY

They have clearly

defined expectations

of what they want from

their provider now and

in the future

Todays consumers are

in control – and they

are driving changes

across the industry

Intelligent


3


…….and now have new avenues to connect with each other and 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”

Greetings,

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…

Within 24 hours, more

than 100,000 people had

signed a online petition:

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…”


4


To evaluate the impact of the age of consumerism the IBM Institute for Business Value conducted both a Consumer ánd a CMO survey

5

IBM Global Consumer Survey

(25 countries;13,237 consumers)

IBM Global CMO Survey

(131 interviews with telecom CMOs)


© 2012 IBM Corporation 6

The vast majority of CSP CMOs believe connecting with customers, in particular through digital channels, will impact marketing most

Factors impacting marketing Percent of CSP CMOs selecting as “Top 5 Factors”


Data explosion

Social media

Growth of channel and device choices

Shifting consumer demographics

Financial constraints

Decreasing brand loyalty

Emerging market opportunities

ROI accountability

Customer collaboration and influence

Privacy considerations

Regulatory considerations

Global outsourcing

Corporate transparency

19%

65%

31%

69%

61%

51%

53%

16%

44%

51%

19%

11%

14%

39

%

53

%

38%

More

42

%

51

% 37

%

51

%

21%

More

36%

More

CSPs

CSPs CSPs

All

Industries

All

Industries

All

Industries

Source: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? (n=131)

No significant difference with ‘all industries’

Telecom (CSPs)

6


50%

The vast majority of CSPs CMOs are underprepared to manage the impact of key changes in the marketing arena

Underpreparedness Percent of CMOs reporting underpreparedness

Data explosion

Social media






ROI accountability




Source: 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?

Global outsourcing


54%

71%

56%

78%

68%

62%

67%

52%

62%

64%

53%

47%

48%

50%

71%

68%

65%

63%

59%

57%

56%

56%

56%

55%

54%

50%

47%

Telecom (CSP) CMOs CMOs All industries


7


And underpreparedness is in particular in the areas that are key for connecting to customers, identified as most critical for CSPs CMOs

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?

Global outsourcing




Data explosion


ROI accountability




Social media



Mean

5

6

7

8

9

10

11

12

13

1

2

3

4

11

50

60

70

40

20 40 60 0

Global Marketing Priority Matrix

Factors impacting

marketing Percent of CMOs selecting

as ‘Top five factors’

Underpreparedness Percent of CMOs reporting

underpreparedness

8 7

11 12

6

3

7

6

1

2 4

5

10 9

Telecom (CSPs)


8


IBM conducted a survey of over 13,000 consumers in 25 countries in both the mature and emerging markets

9

Mature

France UK US

Greece Italy Japan

South Korea Australia Portugal

Netherlands Sweden Spain

Belgium Germany Canada

Emerging

Brazil

Mexico

Poland Czech Republic

India China

UAE

Russia

South Africa

B R I C

Cyprus



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

10

Customer Spending

priorities for 2011 –

2013

Customers’ Adoption of,

Experience with, comms

products and services

Customer Sources of

Information for communi-

cation products/ services

Customers’ Attitudes

towards Comms Providers Customer Advocacy

and Antagonism

Adjacent Market

Opportunities



More than 100 slides describe the characteristics of South African consumers in the context of telecommunications

Customer Spending

priorities for 2011 –

2013

Customers’ Adoption of,

Experience with, comms

products and services

Customer Sources of

Information for communi-

cation products/ services

Customers’ Attitudes

towards Comms Providers Customer Advocacy

and Antagonism

Adjacent Market

Opportunities



1000 respondents were drawn from across South Africa and subscribe to at least one service from a number of selected service providers

Mobile/Wireless Broadband

Pay TV (Cable, Satellite, IPTV)

Internet Telephony

Fixed telephony (landline)

Mobile Telephony

Fixed Broadband (Cable, DSL, FTTx)-

*Services are

47 % 24 %

20 % 9 %

Proportion of sample identifying one of the providers

below as their Primary Communications Provider South Africa : 1000

respondents



Gender, age and income distributions were selected such that they were representative for South Africa

13

Gender

Income Weighting

50% 50%

Above

50

11%

35-39

16%

40-49

19%

25-34

43%

Below

25

11%

Sample size was based on matching targeted

confidence level. The survey results were

weighted to achieve a geographical distribution

representative of:

o country population relative to population of

all countries combined

o consumer sample relative to country

population

Age

18%

35%

22%

7%

2%

15%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Under R

50,000

R 50,000 - R

99,999

R 100,000 -

R 249,999

R 25,000 - R

4,99,999

R 5,00,000 -

R 9,99,999

Over R 1

Million



In our sample, Telkom had the highest proportion of OVER 40s customers, Vodacom has the highest proportion of BELOW 35s

11% 10%16%

8%

51%43%

41%

25%

16%

17%15%

14%

14% 23%

30%

7%1% 2% 6%

19%

5%9%

18%

0%

20%

40%

60%

80%

100%

Vodacom MTN Cell C Telkom

60 and above

50-60

40-49

35-39

25-34

Below 25

Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000

Age distribution across South African CSPs



Some Results



4%

-3%

-6%

-10%

-14%

-16%

-18%

-19%

-19%

-23%

-32%

-24%

Utilities

Food & drinks

Transportation

Mobile

broadband

Mobile Telepony

Pay television

Sports

Fixed Telephony

Clothing

Holiday/vacation

Electrical

appliances

Going out

Mobile Telephony

Mobile Broadband

Transportation

Pay television

Utilities

Elect. Appliances

Fixed Telephony

Holidays

Food & drinks

Clothing

Going out

Sports

53%

46%

24%

15%

11%

10%

4%

-3%

-3%

-5%

-10%

-22%

Utilities

Transportation

Food & drinks

Mobile Telephony

Mobile Broadband

Pay television

Fixed Telephony

Electrical appliances

Clothing

Sports

Holiday/vacation

Going out

Mobile Telephony

Mobile Broadband

Transportation

Pay television

Utilities

Elect. Appliances

Fixed Telephony.

Source: 2011 IBM Global Telecom Consumer Survey, Mature countries N= 8865: South Africa N = 1000:

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?

Consumer sentiment on future spending in South Africa exceeds

Mature Markets by 25% Net Increase/Decrease Net Increase/Decrease

Holidays

Food & drinks

Clothing

Going out

Sports

Mature

average

-15%

average +10%


16

© 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, South Africa N=1000 S06 How often do you use the following communications services?

Mobile Telephony

Email/IM/Chat

Social Networking

VoIP

Video Streaming

Fixed Voice

83%

87%

90%

42%

24%

42%

Daily

Usage

ABOVE 25s

Mobile Telephony

Email/IM/Chat

Social Networking

VoIP

Video Streaming

Fixed Voice

89%

91%

80%

65%

25%

32%

UNDER 25s

2

3

5

1

4

6

1

2

3

5

4

6

90% of under 25s use

social networks daily

42% of under 25s with

Internet stream or

download video daily

17

Under 25s in South Africa communicate more using social networking than all other forms of communication; they also use landline less



71%

55%

38%

11%

13%

11%

21%

21%

15%

33%

41%

68%

Mobile broadband

through phone

Fixed broadband

Mobile broadband

through laptop/

USB

Wireless hotspot

CONNECTIVITY services usage

ABOVE 25 UNDER 25

Q07 How often do you access the Internet via the following mechanisms?

For UNDER 25s with Internet access the mobile phone is the primary means to access media and content services

67%

55%

38%

8%

8%

13%

24%

19%

26%

31%

38%

73%

Fixed broadband

Mobile broadband

through phone

Mobile broadband

through laptop/

USB

Wireless hotspot




One sixth of consumers said that they often cannot make mobile voice calls

36%

44%

29%

48%

40%

46%

16%

16%

26%

0% 20% 40% 60% 80% 100%

Mobile network

availability (Can make

voice calls)

Fixed Internet

connection availability

(Connection)

Mobile Internet

connection availability

(Connection)

Always Most of the time Sometimes/Never

AVAILABILITY of the Network as perceived by consumers

Q09a Please provide an indication of your experience of the frequency with which the following

communication services are available


Consumers’ perception might differ from what actual measurement indicate!



Majority of South African automatically re-dial when they are disconnected but share such poor experience with friends / family

52%

30%

6%

43%

54%

62%

41%

29%

26%

5%

16%

17%

46%

65%

69%4%

21%

12%

Attempt to re-dial/re-connect

Avoid providers with whom friends/family had a

poor experience

Tell friends/family about my poor experience

Contact Customer Service

My Provider proactively contacts me in case of

poor network experience

Switch network providers - e.g. replacing SIM

Always Most/Sometimes Never

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?

95% Attempt Redial/

Reconnect

83% Tell friends/family

about their poor

experience

84% Avoid Providers with

poor experience




One third of all consumers surveyed think it is too much hassle to get through the Call Center

10%

24%

33%

24%

4%3% 3%0%

10%

20%

30%

40%

Telco

networks

unreliable,

variable

service

expected

Don't 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

complain

Q12 Why do you not complain to your service provider when you are disconnected from

the network during a conversation, a voice call or internet session?

Reasons for NOT complaining

24% think that complaining doesn’t make any difference

and another 24% said they have to wait too long in

queue to speak to an employee of the Call Center




72%

66%

58%

48%

41%

36%

35%

18%

63%

71%

78%

33%

29%

34%

37%

16%

Internet search

Recommendations/ advice

Social media

Websites of communication providers

Emails/ promotional offers

Traditional advertising

Retail stores

Shopping portals/ auctions

All Ages

Under 25s

What are you preferred sources of information when you are looking

for communication products and services?

Source: IBM Institute for Business value 2011 IBM Global Telecom Consumer Survey, South Africa N= 1000

Question: What are you preferred sources of information when you are looking for communication products and services?

Internet search, Family/Friends and Social Media have become

the preferred sources of information

22



CSPs should focus on this new trend and mine digital channels, such as blogs, tweets, social networks and peer reviews

Blogs

Tweets

Peer

Reviews

Social

Networks

• Get in tune with today’s digital consumers

by listening to the digital dialogue

• Become part of the dialogue and to be

prepared to proactively respond to

negative chatter

• Encourage a two-way dialogue and

embrace customer input by building online

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

Source:http://www.buzzom.com/2011/07/airtel-adopts-social-media-strongly-customers-can-live-chat-in-facebook-and-orkut/

http://telecomtalk.info/airtel-impact-on-social-media/51645/

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.

“We take the business of customer satisfaction very

seriously.

Abhilasha

Hans,

CSO


24


In a world where people

• are becoming increasingly informed, empowered

and demanding

• 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?

Key Questions

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



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

The Net Promoter Score (NPS) is the traditional measure of word of mouth

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

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.

NPS

CFiq


26


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

Likelihood to Recommend A willingness to recommend one’s

primary provider to friends and family

Purchase Intent

AND A willingness to increase one’s

purchases if one’s primary provider

expanded its assortment and offered

products currently found only at other

providers

Staying Rate

AND

A willingness to stay with one’s primary

provider, even if other providers begin

offering competitive products or services

An Advocate is defined by three criteria

Antagonists Apathetics Advocates

Consumer Attitude


© 2012 IBM Corporation 28 28

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

“I have recommended my provider to several people”

“They have amazing customer service”

“They are more expensive but I hardly get disconnected or have calls dropped”

“I think my telco over-charges me but how can I prove it; my credit runs out too quickly after I top-up”

“The promotions lack any relevance to me”

“ I am looking to switch to the new provider offering cheaper rates”

Antagonists

Advocates

Apathetics

Higher Shareholder

Value

Lower Shareholder

Value

Advocates have a higher

wallet share and are highly

complimentary of the

provider capability

Apathetics are generally

passive participants

susceptible to competitor

offerings

Antagonists have low

wallet share and high

support costs and are

prone to bad-mouth the

provider



South African CSPs score well with respect to the proportion of advocates (34%), but nearly half (49%) remain antagonists

Antagonists

60%

Advocates

18% Apathetics

22%

39%

49%53% 52%

62% 61%

49%

59% 58%55%

58%

46%

57% 60%64%

70%

52%

62%69% 71%

77%

41%

25%

17%

21% 23%

14% 16%

29%

20% 23%26%

23%

36%

25% 22%19%

14%

31%

25%

22%25%

19%

56%

36% 34%

26% 25% 24% 23% 22% 20% 19% 20% 19% 19% 17% 17% 17% 17% 16%13%

9%4% 4% 3%

0%

20%

40%

60%

80%

100%

Sw

ed

en

So

uth

Afr

ica

Fra

nce

Ru

ssia

Me

xic

o

Sp

ain

Gre

ece

Be

lgiu

m

UK

US

Ne

the

rla

nd

s

Cze

ch

Re

pu

blic

Ita

ly

Po

lan

d

Po

rtu

ga

l

Bra

zil

Ge

rma

ny

Ca

na

da

Au

str

alia

So

uth

Ko

rea

Ja

pa

n

Ch

ina

Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372


29


CSPs do not account for the extreme gap in emotive attributes of their customer base

Advocates % strongly agree % strongly agree Antagonists

Give the CSP

credit for

doing

“everything”

right

Find

fault

with

“everything

” CSP

does


Offers me relevant products and services

37% 79%

Values me as a customer 32% 68%

Provide advice to improve my user experience 30% 63%

Resolves problems fairly 28% 60%

35% 67%

Listens and proactively follows-up on issues

32% 64%

Allows me to customize products and services

33% 65%

Displays consistent level of knowledge 37% 66%

Allows multiple ways to interact with them

54% 82%

21% 49%

34% 61%

Doesn’t request for existing information repeatedly 49% 76%

Listens and collects information necessary to meet

communication needs

Seeks input to develop new communication

Products/services

Prompt correction of errors when they occur

Gap



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

Retail/Shopping Banking/Insurance Healthcare

Public Services Travel & Transport

Nbr 1: Receive Mobile

coupons/Discounts (65%)

Nbr 1: Location-based

insurance claims (66%)

Nbr 1: Reminders for

medications/appointments (70%)

Nbr 1: Pay for local services

(e.g. car parking) (58%)

Nbr 1: Geolocalization (61%)

Utilities

Nbr 1: Alert when monthly usage

reaches pre-set threshold (69%)


#1

all c

onsum

ers


31


IBM Confidential


February 2012

Robert Fox

Global Telecom Industry Leader

Global Business Services

[email protected]

Rob van den Dam

Global Telecom Industry Lead,


[email protected]

Contacts

WWW.IBM.COM/IIBV

mailto:[email protected]

mailto:[email protected]

Documents

Consumer Survey South Africa