The assertion that satisfied customers are less likely to churn seems obvious, but is not easy to prove. However, the relationship between customer satisfaction and intention to change providers is direct and measurable, as explained in Analysys Research’s report, Fixed broadband survey: optimising QoE and minimising churn. The report is based on the fixed broadband portion of our Connected Consumer survey, which was conducted across 4000 Internet users in four major European markets during August–September 2009.
Our survey data reveals that:
- consumers that rate their satisfaction with their fixed broadband service overall as ‘unsatisfied’ are twelve times more likely to change service provider within the next six months as those that rate it as ‘very satisfied’ (see Figure 1)
- almost half of the unsatisfied users intend to change service provider within the next six months.
Figure 1: Intention to change service provider within the next six months, by overall fixed broadband customer satisfaction1 [Source: Analysys Mason, 2010]
Of all fixed broadband users, 12.4% intend to change service provider within six months. Further, 23.0% are unsure of their plans – a figure that is likely to have increased during the recession as a result of decreased financial security.
Customer satisfaction is equivalent to quality of experience (QoE), so stakeholders must maximise QoE to minimise churn. A focus on QoE is becoming increasingly critical as broadband markets saturate. Growth in the number of fixed broadband net additions has stagnated in many markets, so it is essential that service providers analyse and understand the actions of their established subscribers in order to prevent churn and create upselling opportunities.
Stakeholders that can determine what consumers want and need can tailor their services to ensure that customer needs are met and that as many of their wants are satisfied as possible, while maintaining a desirable profit margin. Providing the ‘right’ service suite at an appropriate price point will drive service takeup, increase market share and should, ultimately, lead to revenue (and hopefully profit) growth.
The problem is that consumer wants and needs are ever-changing. Information and telecoms technology continues to evolve at an increasingly rapid rate, which leads to greater availability and diversity of broadband-enabled applications. Service providers that cannot track and respond to this evolution quickly will lose out to third parties that can, and risk becoming increasingly dissociated from the value chain as a result of the disruptive applications that their network enables. If broadband connections are reduced to bit pipes, broadband will become increasingly commoditised and access providers will find it more difficult to achieve revenue growth.
Fundamental to a successful broadband strategy, therefore, is to ensure that:
- the right service bundles are being provided in a manner that:
- maximises revenue generation by facilitating upsell to service provider-associated services
- increases subscriber lock-in (and therefore reduces churn)
- services are priced and promoted to achieve an optimal compromise between cost and business generation.
1 Questions: “Do you expect to change your broadband service provider in the next 6 months?” and “How would you score your overall satisfaction with the following aspects of your fixed broadband service? (Overall)”; all countries; respondents with a fixed broadband connection; n = 3937.