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Enterprise survey 2017: satisfaction and reasons for churn

Terry van Staden Analyst, Research
Tom Rebbeck Research Director, Operator business services and IoT

Enterprise revenue is declining for many telecoms operators in high-income countries. It is essential for telecoms operators to keep customers satisfied in order to help defend revenue.

Video interview

Tom Rebbeck, Research Director at Analysys Mason and Head of the Enterprise and IoT research programme, and Terry van Staden, Enterprise Analyst discuss the results of our survey of 1600 enterprises across 8 countries highlighting levels of satisfaction and their reasons for churn.

 
Listen to or download the podcast

 
Video and podcast transcript

Introduction: Hi, I'm Tom Rebbeck, Research Director of Enterprise and IoT at Analysys Mason. I'm here with Terry van Staden, Enterprise Analyst, and he's going to be discussing the results from our enterprise survey. Before we get to the results, Terry why don't you just tell us a bit about the survey and what it covered.

Terry: Yes hi, our survey covered 1600 enterprises across 8 countries globally asking them about their usage, providers and satisfaction levels of various telecoms services including both traditional connectivity and ICT services.

Slide 1:

Tom: Beginning with the overall satisfaction of enterprise services, I see you have used Net Promoter Scores or NPS as an indication of satisfaction. Could you please explain a bit about NPS.

Terry: NPS is a widely used metric to gauge customer satisfaction. It ranges from -100 where every customer is dissatisfied with their services to 100 where every customer is happy with their service. The top companies score around 50 or 60 for NPS and a score of 30 or more represents a good level of satisfaction.

From the chart here we can see that telecoms operators are receiving very low levels of satisfaction. On the left side we have mobile and, on the right, fixed services with the results for SMEs in dark blue and large enterprise in light blue. Compared to benchmarks from other industries, we can see that telecoms operators are doing a poor job of serving the enterprise market and even more so for SMEs.

Slide 2:

Tom: On this slide you showing the percentage of enterprises that are planning to change provider in the next six months. Could you please talk through the results here?

Terry: Yes. On the left hand side you have intended churn for SMEs and on the right, intended churn for large enterprises.

As we saw in the previous chart, satisfaction with telecoms operators is generally low and this is leading to high rates of intended churn.

A further explanation is that competitors are gaining ground on incumbents in the enterprise market, especially where incumbents have a high market share. Incumbents tend to have a higher market share in enterprise services than they do in consumer, and even more so for fixed services than mobile. Our research found that the highest rates of intended churn were in countries where incumbents have a particularly high share of subscribers, for example in Australia and the UAE.

Slide 3:

Tom: So, poor satisfaction is leading to high churn rates. Having a look now at the reasons for churn, what are the fundamental factors driving the high rates of intended churn?

Terry: We asked each of the companies that is planning to churn, why they want to churn.

Here we have the top three reasons for intention to churn in each market surveyed. More than one response was possible so the totals add up to more than 100%.

Generally speaking, enterprises are far less price sensitive than consumers with the exception being the SME mobile market where price explained 62% of intended churn.

Bandwidth is the single most important differentiator in a fixed broadband proposition for SMEs.

Large enterprises place much greater importance on customer services than SMEs and operators need to offer them a higher level of support.

In contrast to SMEs, bandwidth is less of a problem for large enterprises, given their wide us of dedicated or leased lines. Customer service and prices explain most of the intended churn rates.

These results suggest there is wide scope for operators to differentiate on quality rather than just price. Focus on network coverage, network quality and customer service as primary differentiators.

Tom: So, obviously price is still important; operators need to be competitive but understand the significant importance enterprises place on aspects of quality.

Slide 4:

Tom: This chart shows the relationship between Net Promoter Score or NPS on the x-axis and the corresponding rates of intended churn on the y-axis. Talk us through this chart and what it's showing us.

Terry: Yes, we plotted the NPS and intended churn rates for 22 operators on this chart to see the actual magnitude of the relationship between satisfaction and churn, so each dot is a single operator. Regression analysis of the 22 operators revealed that operators can reduce intended churn by 1.6 percentage points for every 10-point increase in NPS.

Operators who perform well in customer satisfaction surveys should use this in marketing.

This would help operators to attract enterprises that are seeking better services, and would let current customers know that they are subscribing to market-leading providers, which may mitigate their own churn.

Slide 5:

Tom: So then what's the relationship between satisfaction levels with traditional services and operators' potential to compete in the ICT market.

Terry: Yes, here we have the NPS and intended churn results for large enterprises. On the left the results are for enterprises that also bought security solutions from their operator. On the right, we have results for enterprises that didn't purchase security solutions from their operator.

Tom: Ok so the NPS is the dark blue bar from the left y-axis and the light blue circles are the intended churn rates from the right y-axis.

Terry: Yes. And we can see that large enterprises who purchased security solutions from their operator are both significantly more satisfied with their traditional services and more than four times less likely to churn. We need to be careful about causation - we don't think it is that security solutions themselves are making customers happier, but it is only customers that are already satisfied who are buying additional services from their operators.

Operators who want to compete in the broader ICT market will need a base of solid traditional connectivity services. It is through the relationship and trust built on high quality legacy services that will drive operators' growth in this market.

Operators need to explore and understand the relationship between satisfaction and their potential to sell new products; more satisfied customers are much better prospects for selling additional services.

Tom: Ok so you've got a sort of double whammy of a dissatisfied customer in that they far less likely to buy other services from you and more likely to churn.

Slide 6:

In summary, there are three conclusions to draw from this research.

  1. Operators need to prioritise network coverage, network quality or speed and customer service as differentiators in addition to being price competitive. These are the most important facets to enterprises and explains most of the intended churn rates.
  2. Operators need to do more to improve satisfaction. Reducing churn is more important than ever in saturated markets and finally:
  3. Operators will need to improve the quality of traditional services if they aim to compete in the broader ICT market. Customers who are not satisfied with their core connectivity services are unlikely to want to purchase additional services from their operator.

Closing slides:

This video presented the highlights from our survey which comes from 8 different reports listed on the left-hand side of the table. We also have 6 different upcoming country reports describing the state of the enterprise market in each country which will be published over the coming months. For details for if you wish to discuss anything further, please don't hesitate to contact me.