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2016 Acquisition and

Retention Study
Global Summary Report
2016 Acquisition and Retention Study 2

About this report

The Nokia 2016 Acquisition and This study includes


Retention Study has been designed specific insights on:
to help mobile operators understand
• The
 key drivers for churn
current trends in consumer
across global markets
behaviour, in order to make more
informed decisions when developing • The
 factors leading to increased
acquisition and retention strategies. data and Wi-Fi usage
The focus of this extensive study • Current
 security concerns
is to uncover the core drivers of and the likelihood to churn
customer retention by providing because of security breaches
detailed and granular insights around
• Consumer
 attitudes towards new
consumer perceptions, causes of
operator revenue opportunities,
dissatisfaction and the likelihood
such as mobile advertising
to churn across several scenarios.
and connected devices.
This year’s study marks the ten
This global summary report is an
year anniversary of the global
introduction to all of the key themes
consumer survey, which now covers
covered in the Acquisition and
fourteen countries and 20,000
Retention Study. This will be followed
online respondents. As well as the
by a series of reports which provides
quantitative online survey being
more in-depth findings on each of
supplemented with secondary
the areas covered in the research.
research and qualitative in depth
interviews with operators, the
2016 study also includes insight
from 140 consumer interviews.
2016 Acquisition and Retention Study 3

Introduction
This year’s study pulls together insights from four
different research methods to ensure that the data
collected is robust, and that it takes both consumer
and operator perspectives into consideration.
Research for the 2016 Acquisition
and Retention Study was carried Quantitative Qualitative Operator Secondary
out by KAE on behalf of Nokia Online Consumer Interviews Research
between December 2015 and Survey Interviews
January 2016. KAE is a strategic
marketing consultancy that
specialises in global research within More than 20,000 140 in-depth 28 in-depth Bespoke desk
the telecommunications industry. mobile phone users consumer interviews with research to
were surveyed interviews, ten operators across contextualise
across 14 markets interviews per the 14 markets, two responses and to
market operator interviews gain insights into
per market operator strategies

The study covers 14 markets that The in-scope markets


were segmented as either a mature
or a transition market in line with
the ICT development index.

Mature markets:
Transition markets:

The findings from this study


have been organised around key
themes, which all have an impact
on acquisition and retention:

Drivers of Choosing a Trends in Voice and Data


customer mobile new sign-ups messaging allowance
retention operator
p.4 p.5 p.6 p.7 p.8

Value-added Bundled Mobile Security


services and services advertising
connected devices
p.9 p.10 p.11 p.12
2016 Acquisition and Retention Study 4

Drivers of customer retention


A positive customer experience has a direct impact on
consumers’ likelihood to stay with their mobile operator.

In order to quantify and measure The global impact of each of the four retention categories:
the impact of customer experience,
this year’s Acquisition and Retention 2014 2016
Study sought to understand what
the most important variables are 34% 26%
within each of the four retention
NETWORK QUALITY
categories: Network Quality, Cost
& Billing, Customer Care and
Service & Device Portfolio.
Poor operator performance
in any of these categories will
40%
ultimately lead to dissatisfaction 45%
and increase consumers’ likelihood
COST & BILLING
to churn. This study benchmarks
operator performance, as
perceived by customers, against
country and global averages
to highlight comparative
strengths and weaknesses. 24%
While Network Quality and Cost & CUSTOMER CARE
Billing still have the greatest overall 15%
impact on customer retention,
there has been a significant increase
SERVICE & DEVICE
10%
in the importance consumers 6% PORTFOLIO
place on Customer Care and the
Service & Device Portfolio. More
consumers in 2016 are likely to tend to have more customers that receive. The growing importance of
switch operator if they feel that are satisfied with their Network Customer Care is consistent across
their needs are not being sufficiently Quality as the expectation of both mature and transition markets.
met within these categories. the service is lower than it is for
Service & Device Portfolio
Cost & Billing premium operators. Even still,
Though not a significant driver of
Cost & Billing has the biggest impact dissatisfaction with Network Quality
customer retention, this category’s
on a consumers’ likelihood to stay, is closely linked with the likelihood
influence on retention has increased
which is largely driven by Calling Plans to switch. In fact, 42 percent of
over the years and now provides
& Rate Structure – the single most customers who claimed to be very
an opportunity for operators to
important variable across all four dissatisfied with their Network
differentiate. Whilst the category is
retention categories. Customers that Quality stated that they are likely to
dominated by Device Portfolio, this
are dissatisfied with the availability churn as soon as they are able to.
covers more than just the range
of appropriate price plans from their Customer Care of handsets an operator provides.
operator are extremely likely to churn. This is quickly becoming one of the It also takes into consideration
Network Quality most important retention categories. the importance consumers place
Internet Quality is unsurprisingly the Not being able to provide the right on the level of aftercare provided
most important variable within this level of service when consumers make and the expertise operators
category. However, factors such as general inquiries or complaints is a demonstrate when recommending
Voice Quality and Network Coverage major source of dissatisfaction. There devices and handsets.
are still also key drivers of retention. is a growing group of consumers
The importance consumers place who would be willing to switch if
on Network Quality varies greatly they believed that another operator
by operator. Generally, smaller was able to provide a better care
operators that compete on cost experience than what they currently
2016 Acquisition and Retention Study 5

Choosing a mobile operator


After price, the main reasons for choosing a mobile
operator are network quality and network coverage.

Main reasons for choosing the current operator.

Best prices 45%


Best network
26%
coverage
Best geographical
25%
network coverage
Most of my family/
22%
friends use it

Best customer care 17%


Complimentary
17%
products or services
Latest mobile
14%
technology
Best choice of
11%
mobile devices
Best data protection
9%
and security

Reasons for choosing an operator Sources of advice The onboarding experience


Because operators now offer so Recommendations of family and Operators should not consider
much more than just a phone for friends have consistently played an acquisition complete when a new
calls and SMS, consumers have important role when it comes to user signs up to a post-paid contract.
to consider many new variables choosing a new operator. Although In fact, new subscriber concerns
when choosing a new mobile there are now many more sources are distinctly different from those
operator. So whilst price is still the of advice available to consumers, of existing subscribers as they
most important consideration, such as help in-store and through place a much greater importance
26 percent of consumers chose online channels, over 40 percent on Internet Quality in the first six
Network Quality and 25 percent of consumers still rely most on months of being a customer.
chose Network Coverage as the the advice and recommendations
If their expectations around the
main reason for selecting a mobile made by family and friends.
performance of mobile data are
operator. Being on the same network
Because personal recommendations not met, these consumers are likely
as friends and family is also one
are so popular, and because to become dissatisfied quickly and
of the main considerations.
consumers are significantly more are at risk of immediate churn.
Besides the more traditional likely to join a network if it is
New subscribers are also more
reasons for choosing an operator, currently being used by friends
likely to experience more issues
many consumers are now starting and family, it is no surprise that
around Cost & Billing when
to consider factors such as switching away from the network
compared to existing customers.
Customer Care, the availability of most commonly used by friends
36 percent of new subscribers have
complementary services and even and family is a significant barrier –
experienced some kind of issue
the data protection and additional particularly in transition markets.
around understanding the charges
security features available when
Once consumers have been through and the accuracy of their bill.
selecting a new mobile provider.
the process of choosing a new
mobile operator, it is important
that their new carrier meets their
immediate expectations to mitigate
the threat of buyers’ remorse.
2016 Acquisition and Retention Study 6

Trends in new sign-ups


Growth in 4G sign-ups continues despite barriers such
as device capability, cost and the perceived need for 4G.

4G growth Top four reasons for not using 4G even if available through operator
In line with industry expectations,
4G subscriptions are on the My device doesn’t
32%
rise with 38 percent of new support 4G
subscribers over the last 12
4G is too expensive 24%
months choosing 4G networks.
This growth in 4G sign-ups is largely I don’t need 4G 22%
driven by mature markets, with Japan
and the United States leading the Don’t know the
15%
way. Whilst the transition markets are difference
currently experiencing a slower rate
of adoption, rapid growth in the near
term is expected as the availability
of 4G becomes more widespread.
However, there are still significant 4G driving better customer
barriers to increased 4G usage in experiences
both mature and transition markets. Increasing 4G adoption globally
Barriers to 4G adoption is key to the long term success of
Device incompatibility, the perception mobile operators. Data from this
of high prices and a general lack study shows that those subscribed
of awareness continue to hinder to 4G services are more likely to
4G adoption. Over 30 percent be satisfied with their mobile data
of consumers in both mature speeds, more likely to be using
and transition markets stated more than one gigabyte of data
device incompatibility as the top per month and more likely to be
reason for not yet using 4G. satisfied with the consistency
of their mobile data. Combined,
The two biggest barriers to these factors significantly reduce
4G adoption are already being subscribers’ likelihood to churn.
addressed. Whilst the influx of
increasingly affordable 4G handsets
continues to drive consumer “I would like to have 4G internet, but
adoption, price in many markets my phone is not compatible yet”
could just be a perception issue,
as most operators no longer – Consumer, Mexico
charge a premium for 4G.
The issue of not needing 4G is
a more complex challenge. 20
percent of consumers in transition
markets, and 12 percent in mature “I don’t know what 3G and 4G really means!”
markets still avoid 4G even though
it is available to them. Additionally,
– Consumer, Canada
despite extensive global and local
4G marketing campaigns, consumer
understanding remains a key barrier.
Many consumers still do not know “No, I’m not interested in higher speed
the difference between 3G and 4G.
data - it’s already expensive”
– Consumer, Canada
2016 Acquisition and Retention Study 7

Voice and messaging


Globally, the use of messaging apps is
far more common than calling apps.

Voice and SMS revenue has been Usage of phone service vs. apps for messaging
declining steadily for many years,
largely due to the emergence of
data consuming messaging and 22%
calling apps. Although the usage of
these apps differs by market, most 45% app
consumers globally still prefer to use users 47%
traditional phone services for making 15%
calls. The use of messaging apps
however, is far more prevalent. 55 8% 86% app
percent of consumers globally claim users
to use some kind of messaging app.
Messaging apps 55% 27%
The use of messaging apps is
particularly popular in transition
markets where 86 percent of
12%
consumers claimed to use them.
Furthermore, 47 percent of all
consumers in transition markets 14%
use messaging apps more often
than traditional SMS services. MATURE TRANSITION
Whilst pricing is a key factor for this
trend, consumers were also quick
to point out additional benefits of Usage of phone service vs. apps for calls
using apps, such as the ability to
see who is online and whether they 5% 8%
have seen your message or not, 8% 15% 26% app
22% app 8%
and the fact that these apps can be 37% app users
9% users
used over Wi-Fi, even if they have users 10%
10%
used their SMS and data allowance.
Because messaging apps do not 12%
have a fixed cost associated with
them, they are also more popular
among prepaid consumers. 34
percent of prepaid consumers
claimed to use messaging apps 78% 63% 74%
more often than traditional
phone services, compared to 25
percent of post-paid customers.
Calling apps
Despite the whirlwind nature
of the messaging market, voice
remains a more consistent revenue
driver for operators, even though MATURE TRANSITION GLOBAL
there is still a downward trend.
The total number of consumers using
voice apps is considerably lower Using apps more often Using apps and phone
than the use of messaging apps. 74 than phone service service about the same
percent of consumers globally still
rely solely on core operator services Using phone service Don’t use apps
for making and receiving calls. more often than apps
2016 Acquisition and Retention Study 8

Data allowance
Consumers avoid using apps on the mobile network for
three main reasons: data allowance, cost and speed.

Top three apps consumers avoid using on mobile broadband

Messaging/
Calling
16%

Video streaming 16%

Social media 15%

App avoidance The need for Wi-Fi Willingness to pay for Wi-Fi
Messaging apps are the most avoided Due to perceived issues with data Because security and access to
by consumers when using mobile usage, speed and reliability and trusted Wi-Fi networks is a concern
broadband, followed closely by because consumers are fearful of when outside the home, consumers
video streaming and social media consuming their data allowances globally are interested in receiving
apps. The reasons for avoiding too quickly, there has been a global access to Wi-Fi hotspots from their
apps differ by market; mature increase in the use of Wi-Fi. mobile operator, with many willing
markets are more concerned with to pay a fee for the service.
Wi-Fi is quickly becoming the go-to
using up their data allowances too
choice for a worry-free, reliable and
quickly, while transition markets
cost effective mobile experience -
are more concerned about the
particularly when at home. Although
cost and speed of mobile data.
81 percent of consumers switch to
Because many consumers are fearful Wi-Fi when at home, the number
of using apps whilst on mobile data, is significantly less when on the
they welcome the opportunity to move. Only 51 percent join Wi-Fi
gain better insights on their data when visiting friends and family at
usage – particularly with real time their homes and just 41 percent
balance monitoring tools, which 36 whilst at work or university/school.
percent of all consumers claimed to
The main reasons for the decrease
use. Consumers also welcome the
in Wi-Fi usage outside the home
strategies that operators are putting
is due to lack of awareness,
in place to help alleviate the negative
security concerns and because it
impact of using data allowances too
often delivers a poor experience
quickly. Offering zero-rated services
with speed and consistency.
and subsidised subscriptions has
helped operators deliver a better
overall customer experience.
2016 Acquisition and Retention Study 9

Value-added services and connected devices


Value-added services leads to a reduction in churn, better
perceptions of network quality and increased data usage.

In the 2016 Acquisition and Retention Study, “Free services would


value-added services were defined as free or be great, and it would
discounted products or services offered by the increase my likelihood
mobile operator to stay with them,
Value-added services do not include the core but they would need
operator offerings, such as SMS, data and minutes to be relevant to me
to get full value”
The positive effects of value-added services
This chart demonstrates the increase in the likelihood to – Consumer, US
stay, perception of network quality and data usage
when value-added services are offered to consumers

Increase in the likelihood to stay


+11% with current mobile operator

Increase in consumer’s perception


+55% of network quality

Increase in the number of consumers that use


+15% more than one gigabyte of data per month

The concept of receiving value-added Connected devices


services as part of a As the concept of value-added
mobile subscription is evolving. services evolves, it could also start
In mature markets, offers are to include connected devices –
focused around video and music devices and services that enable
streaming services as a means of consumers to control various
demonstrating network quality. objects from their smartphone.
Although this trend is still developing
56 percent of consumers in
in transition markets, consumers
mature markets and 82 percent
have demonstrated an interest in
in transition markets would be
receiving offers, particularly for
interested in controlling at least
device insurance and cinema tickets.
one additional device from their
Impact of value-added services smartphone. Controlling devices
Many operators claimed that by in the home is the most popular
offering value-added services, they choice by all consumers, but there
had experienced an improvement is also clear appetite for categories
in overall retention. This view was such as health, car and utilities.
substantiated by consumer
Connected devices represent an
responses, which proved that offering
opportunity for operators, as most
value-added services does have a
consumers globally would prefer
positive impact on retention – by as
for such devices to come from
much as 11 percent. It also has a
their mobile operators, ahead of
significantly positive impact on
other providers such as handset
consumer perception of network
manufacturers, other device
quality and their likelihood to use
manufacturers or app developers.
more than one gigabyte of mobile
data each month.
2016 Acquisition and Retention Study 10

Bundled services
Bundled services help to reduce consumers’ likelihood to
churn, whilst also increasing ARPU.

Quad play focus Subscription to each type of bundled service


This is an area in which operators This chart shows the services that consumers bundle
globally have made significant and with their main mobile phone subscription
sustained investments. Being able
to offer quad play services has
Home 31%
been a strategic focus for many
Telephone 22%
operators looking to compete
with cable/satellite TV providers,
particularly in European markets
where consumers are generally 30%
Home
more likely to bundle. The reason
Broadband 16%
for this investment is largely due to
the hypothesis that consumers are
less likely to churn if they have more
than one service from a supplier. Multichannel 8%
Currently, 44 percent of global Pay TV 6%
consumers claimed to bundle at
least one other service with their
mobile/smartphone subscription
from their mobile operator. On Demand 3%
Streaming 2%
Home telephone and home
broadband services are the most
frequently bundled services, followed
by multichannel pay TV services. 2% Mature market
Music
Increased appetite for bundling Streaming 3% Transition market
Bundling has drastically increased
over the past two years across
many of the markets covered in the Despite this, there is demand for
2016 study. The most substantial comprehensive bundled propositions
increases were seen in Mexico (+32 – particularly in transition markets.
percent) and Spain (+29 percent). Not only could this help operators
increase ARPU, this research
Whilst price is an obvious driver demonstrates that those who
for this global increase, many bundle are also less likely to churn.
consumers also highlight the
importance of convenience, where
receiving all services from a single
provider on a single bill is becoming
a key driver for bundling.
Despite these benefits, there are still
many that do not currently bundle,
predominantly because they feel
that they can get cheaper deals by
using different providers or because
they are already locked into contracts
with other providers. Another key
barrier to bundling is that consumers
feel that their mobile operator does
not offer the services they need.
2016 Acquisition and Retention Study 11

Mobile advertising
There is an untapped opportunity for
operators to increase mobile advertising.

Mobile advertising landscape Receive mobile ads from mobile operator


Consumers have come to expect
to see some kind of advertising
content on their devices, especially
when consuming free content online
or when playing games. However,
frustration typically arises when ads
are deemed irrelevant, when they
damage the user experience or when
the ads they receive are intrusive
47%
and invade personal privacy.
Although most agreed that targeted
ads are intrusive, 38 percent of
consumers would be more open
to the concept if they contained
4% Of whom, 4% don’t want to
receive any mobile ads
relevant information that was
targeted to their needs in exchange
for rewards and benefits.
Operator mobile advertising
Operator-led mobile advertising
though, is less common. Currently, Don’t receive mobile ads from mobile operator
47 percent of consumers globally
claimed to receive mobile ads
from their operator, and it is
particularly popular in Mexico
and South Africa. Most mobile
advertising currently appearing
on consumers’ devices contains
information on device upgrades
and other operator services. 53%
Just because there are currently
a large number of consumers who
do not receive mobile ads from
their operator, does not mean
that they are against them. In fact,
only 16 percent of those that do 16% Of whom, 16% don’t want
to receive any mobile ads
not currently receive ads on their
phones would prefer not to see
them at all. Furthermore, of the 47
percent of consumers that do receive
mobile ads from their operator,
just 4 percent stated that they would
prefer not to receive them.
2016 Acquisition and Retention Study 12

Security
Globally, 91 percent of consumers are worried
about at least one security issue.

Mobile security concerns Concern and personal experience of the seven security issues
Consumers globally are most This chart highlights the security threats that consumers globally
concerned about viruses/malware, stated as concerning, overlaid by personal experiences of them.
internet fraud and identify theft.
However, viruses/malware is the only
type of breach that is significantly 61%
impacting consumers, with 39
percent claiming to have suffered 68% 67%
from some kind of virus/malware.
The most experienced security
breach is spam, as 61 percent of 54% 39%
consumers have suffered from
some kind of spamming. However, 15%
because this issue rarely leads to
financial or data losses, it is not
something that consumers are
particularly concerned about. Spam Viruses/Malware Internet fraud
Despite the fact that very few
consumers have actually experienced 67%
security issues, concerns around 57% 62%
cyber-threats are extremely high
and there is a cohort willing to pay
a premium to their operators for
additional security solutions. 28
percent of consumers in mature 11% 7% 7%
markets and 40 percent in transition
markets stated that they would
be willing to pay a premium of 5 Online privacy
percent for additional protection. Fraudulant charges Identity theft
breach
A key driver for churn
The results of this study show that
the consequences of a security
breach can be extremely damaging 37%
for operators. Even if the operator is
not at fault, 47 percent of consumers
stated that they would be likely to
switch carrier if they were to ever
experience a security breach.
7%
Issues consumers are worried about
Harmful content
online Issues personally experienced
2016 Acquisition and Retention Study 13

Methodology

Quantitative online survey Operator interviews


A 60 minute questionnaire was Two operator interviews were
designed to capture end-user conducted within each market. Each
perceptions related to all elements interview lasted approximately 60
of mobile use. Not only did this minutes and respondents were
provide a wealth of information on recruited based on their experience
how the key drivers of retention and industry expertise. They all held
have evolved since the last study senior management positions in
in 2014, it also helped highlight areas such as marketing, strategy,
new acquisition drivers. acquisition, retention and loyalty.
A Shapley regression model was A discussion guide was created
created to determine the individual to stimulate discussions around
contributions towards retention of wider operator strategies, before
each of the four customer experience focusing on the specific area of
categories (Network Quality, Cost & acquisition and retention, and how it
Billing, Customer Care, and Service has evolved over the years. Insights
& Device Portfolio). This model from all 28 operator interviews
also made it possible to determine were aggregated and used in the
relative operator performance output to support findings, and
against its country average. to provide a representation of
current operator strategies.
In order to demonstrate a true
reflection of market conditions, Secondary research
country samples were targeted and Secondary research was conducted
weighted according to age, gender, to help provide a comprehensive
region and operator market share. understanding of the current
acquisition and retention landscape,
Qualitative consumer interviews
and to uncover trends on the topic
Qualitative interviews were conducted
from adjacent industries. The
with subscribers of the top four
secondary research also provided
operators within each market. In
evidence on current strategies
total, ten consumer interviews
that were discussed during the
were conducted per market.
consumer and the operator
A discussion guide was created interviews. Finally, this research
that followed the structure of helped to challenge consumer
the survey questionnaire. It was perceptions and operator strategies.
designed to probe for additional
insights and to challenge certain
consumer perspectives. Key
insights from these interviews were
aggregated and used to support
findings from the quantitative
survey and to challenge current
operator perspectives and beliefs.
For more information from
the Nokia 2016 Acquisition and
Retention Study, please visit:
www.nokia.com/AandR-Study

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© Nokia 2016