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Developed Asia–Pacific operators’ poor Net Promoter Scores suggest pricing and customer service issues

"It is challenging for most operators in developed Asia–Pacific to differentiate themselves, as shown by their unusually similar Net Promoter Scores."

Developed Asia–Pacific operators’ poor Net Promoter Scores suggest pricing and customer service issues

Mobile operators in developed Asia–Pacific received weak scores for consumer satisfaction metrics in our latest Connected Consumer Survey. Their Net Promoter Scores (NPSs)1 were mostly negative and were particularly low compared to other regions – the lowest score was -71. In contrast, the lowest NPSs received by operators in emerging Asia–Pacific, the Middle East and North Africa and Sub-Saharan Africa fell in the -30 to -40 range. This comment examines consumers’ perceptions of operators in Australia, Japan, South Korea and Taiwan in more detail.

Subscribers’ stated reasons for churn may explain operators’ low NPSs

Our survey respondents’ stated reasons for wanting to churn can explain operators’ low NPSs to some extent. Respondents intending to leave their operators were mainly concerned with prices and customer service. Network quality was also an issue, despite the region’s well-developed mobile infrastructure. Individual markets also had their own additional issues. Improvements in any of these areas may lead to considerable subscriber gains for operators.

Figure 1: Net Promoter Scores for mobile operators by country2

 Net Promoter Scores for mobile operators by country

Australia

Australia’s Optus Mobile was the only developed Asia–Pacific operator that received a positive NPS (3). Its prices and network quality are only in line with its competitors and many respondents were unsatisfied with its customer service. However, the operator seems to differentiate itself effectively with value-added services (VASs), including zero-rated music and video, and sport apps bundled with data plans. In contrast, the incumbent Telstra has zero-rated music, but not video, and Vodafone does not have a comparable VAS.

Vodafone’s trailing position may be due to its network: it launched 4G 19 months after Telstra and 10 months after Optus. Nearly half (48%) of Vodafone’s potential churners were concerned about coverage, compared to 39% of Optus’s and 16% of Telstra’s potential churners. However, all major Australian mobile network operators had a similar proportion of potential churners who were dissatisfied with data speeds (22–26%).

Japan

Operators’ NPSs in Japan are exceptionally low and very similar. This suggests that consumers are dissatisfied with mobile services overall and that there is little to differentiate individual operators’ performances. In addition, subscribers’ satisfaction did not improve with data usage. Less than half (39%) of respondents intended to remain on the same mobile plan within the next 6 months. In contrast, over 50% of respondents in Australia, South Korea and Taiwan intended to stay on their current plan.

We observed that the proportion of Japanese subscribers looking to churn is the lowest of the surveyed countries – 7%. However, it has by far the most respondents who stated that they were ‘unsure’ about whether to change their mobile service. They may be dissatisfied with their provider, but face a difficult decision-making process, including comparing complicated tariff plans across operators.

South Korea

South Korean operators’ NPSs were in order of their market share, suggesting that scale may have had an impact. Price is the primary reason for the low NPSs: 49% of potential churners (who comprised around 10% of our South Korean respondents) cited price as a churn driver, particularly subscribers of LGU+.

Consumers’ dissatisfaction may also be a reaction to recent developments in the market, including a cap on smartphone subsidies. Operators have developed alternative incentives in response, including shared plans and membership discounts. Operators also started giving larger discounts for adding family members to a mobile or converged subscription. The survey data showed that moving to a shared plan was a significant purchasing criterion for South Korean respondents planning to make a change to their current plan (21% of respondents).

Taiwan

Taiwanese operators’ NPSs were quite similar, which makes it challenging to identify areas of differentiation, but one notable area is data usage. Chunghwa Telecom received positive NPSs from subscribers who used a very small (≤500MB) or very large (>5GB) amount of data – 11 and 8, respectively. However, subscribers who used between 500MB and 5GB were less satisfied (NPSs between -18 and -44). This may be because the operator offers more lower-end data packages than its competitors do and promoted new 4G plans in 2016, including an unlimited plan for new subscribers churning from other operators.

Consumers in Taiwan have become accustomed to generous and unlimited data allowances, but appear to be dissatisfied with network quality – 38% of potential churners cited network speed as a reason to churn, while coverage was a concern for 31%. These factors were also cited more often as purchasing criteria compared to other countries in developed Asia–Pacific. Network quality was an issue for subscribers of all the major operators in Taiwan.

Incumbents performed relatively well in developed Asia–Pacific

We have observed that incumbent mobile operators often have both low churn and low NPSs in previous studies. This may be a result of complacency among incumbents – they may be underperforming in some areas, despite outperforming or dominating in others.

However, survey respondents in developed Asia–Pacific viewed their incumbent operators differently. Incumbents did relatively well, receiving either the highest or second-highest NPS in their respective markets. Meanwhile, subscribers to incumbents in Japan, South Korea and Taiwan were the least likely to churn compared to subscribers of other major operators. Telstra’s subscribers in Australia ranked second out of the three major operators in terms of likelihood to churn.

Incumbents in developed Asia–Pacific may receive better scores than in other regions, but they do not have a particularly strong lead over their competitors. Major alternative operators in these markets charge similar mobile tariff prices to incumbents and have well-developed mobile infrastructure. There is still a risk that incumbents’ NPSs will fall into line with other mature telecoms markets, where alternative operators receive higher scores due to aggressively price- and customer-focused approaches. However, it is challenging for most operators to differentiate themselves in developed Asia–Pacific markets, as shown by the unusually similar NPSs in each country.

Regardless of their position as incumbent or challenger, operators must investigate and address the main causes of customer dissatisfaction in their respective markets. Price and network quality were important churn drivers in developed Asia–Pacific, as in other surveyed markets. Operators in this region would also particularly benefit from reviewing their customer service programmes (especially in Australia and Japan) and mobile service packages.

Further analysis of these and related issues can be found in our recently published report Connected Consumer Survey 2016: mobile churn and customer satisfaction in developed Asia–Pacific.


1 NPS is a proprietary standard metric used to calculate customer loyalty and satisfaction. Respondents are asked to rate on a scale from 0–10 whether they would recommend a product, service or company to a friend. A respondent who gave a score of 0–6 is considered to be a ‘detractor’, 7–8 is considered to be neutral and 9–10 is considered to be a promoter. The percentage of detractors is subtracted from the percentage of promoters to give a score between +100 and –100 for each company.

2 Question: “On a scale from 0–10 (where 0 = not at all likely, and 10 = definitely), how likely are you to recommend your mobile service provider to friends or family members?”; n = 4000.