1. How to generate
customer loyalty in
fixed markets
Acquisition and Retention Study,
March 2009
Global Summary Report

2. Contents
3 Executive summary
4 Objectives and methodology
5 Churn damages profitability
5 The threat of customer churn: low customer
lifetime value
7 Most customers would consider another
service provider
8 People look to a variety of sources to inform
their decisions
9 Brand “stickiness” is low
10 In mature markets most customers have
churn experience
11 Churn triggered by promotional offers
12 Churn owing to dissatisfaction
13 Customer relations decline most strongly
between one and three years
14 What makes a loyal customer?
16 Internet quality, costs and customer service
boost customer retention
17 Service and device portfolio
18 Network and service quality
19 Cost and billing
20 Customer care
21 Challenges and opportunities for CSPs
23 Customer insight holds the key
2 How to generate customer loyalty in fixed markets

3. Executive summary
As a rule of thumb, decreasing the level of churn by 10 percentage points
increases the EBITDA margin of communications service providers (CSPs) by
10 percentage points or more. Customer acquisition and retention is therefore
fundamental to the profitability and ultimate survival of CSPs, especially since the
growth of customers and subscriptions is slowing in most markets for fixed
Internet and telephony services. The good news is that the existing provider is in
an ideal position to influence customer loyalty by delivering an excellent
performance.
The Nokia Siemens Networks acquisition and retention study asks two key
questions. What kind of customer experience has to be provided to manage
churn? And how can CSPs build a sustainable competitive advantage, apart from
running short-term promotions?
Customers are pragmatic. They increasingly see different CSP offers as
interchangeable and most will churn if they see an advantage. Willingness to
churn increases with the maturity of the market, and a CSP’s performance is
more important for most customers than brand image.
Recent churners say they decided to switch because of dissatisfaction with their
existing services, promotional offers from competing providers or both. They
are most likely to churn at between one and three years, probably at the end of
a 12 or 24-month contract.
CSPs therefore need to work on satisfying their customers better. The survey
identified four key areas:
1) Cost and billing as most critical area, with contract conditions and pricing
structure at the top of the list of subscriber complaints. Customers want
transparent, flexible contracts, combined with clear billing.
2) Network and service quality which is dominated by the perception of Internet
speed.
3) The service and device portfolio, with a fast and trouble free service activation
being the most critical point. People also want tailored service bundles that fit
their needs more closely.
4) Customer care, where people are looking for a fast resolution of any problems
and clear information about the status of any enquiries. Subscribers are
looking for a “service champion”.
Armed with the right customer insights, CSPs can continuously optimize the
individual customer’s experience and successfully reduce churn to a minimum.
How to generate customer loyalty in fixed markets 3

4. Objectives and methodology
Nokia Siemens Networks carried out the acquisition and retention study to
explore the customer experience in both the mobile and fixed telephony and
broadband markets. This document focuses on the fixed markets.
In order to get a worldwide view about the customer experience under different
market conditions, the sample consists of mature markets, which have already
experienced heavy shifts in the CSP’s market shares, as well as highly
competitive emerging markets.
The study is based on nearly 12,000 interviews and is representative for the
markets in which it was carried out, which were Brazil, China, Germany,
Indonesia, Pakistan, Russia, South Africa, UK and US.
Figure 1. The Acquisition and Retention study
is based on nearly 12,000 interviews, covering
nine countries.
United Kingdom Russia
Mobile sample Mobile sample
Fixed sample
Germany
United States Mobile sample
Mobile sample Fixed sample China
Fixed sample Pakistan Mobile sample
Mobile sample Fixed sample
Brazil
Mobile sample Indonesia
Fixed sample Mobile sample
Field period: South Africa
12/08 to 02/09 Mobile sample
11,866 interviews
The key topics are:
• What are customers’ key reasons for selecting specific service providers?
• What does this decision-making process look like? Who (which people) and/or
what (which facts) have the biggest influence?
• How likely are customers to switch CSP and what are their reasons for
churning?
• How satisfied are consumers with their current service providers and what
influences their satisfaction?
• What can CSPs do to increase customer loyalty?
4 How to generate customer loyalty in fixed markets

5. Churn damages profitability
In most markets for fixed Internet and telephony services the growth of customers
and subscriptions is slowing and may even be close to zero. Thus the competition
for the existing customer base is becoming fierce. Retaining valuable customers
is now mandatory for long-term business success. The costs of win-back in lost
revenues and acquisition costs has put churn prevention and loyalty management
at the top of the agenda for many CSPs.
The threat of customer churn:
low customer lifetime value
There is a clear correlation between the level of churn and profitability because
churn has a direct impact on the average customer lifetime value (CLTV). Put
simply, it is expensive to recruit new customers and churn can prevent CSPs
from recouping those costs and generating profit from subscribers. As a rule of
thumb, decreasing the level of churn by 10 percentage points increases the
EBITDA margin by 10 percentage points or more.
Figure 2. EBITDA margin is adversely affected
by high rates of churn. 60%
50%
40%
EBITDA margin
30%
20%
10%
0%
0% 10% 20% 30% 40% 50% 60%
Blended churn rate, 2007
How to generate customer loyalty in fixed markets 5

6. High subscriber acquisition costs are especially critical for CSPs in mature
markets. Acquisition costs include different types of marketing costs, retailer
commissions and subsidies for equipment such as modems, routers and
set-top-boxes.
Churn also causes indirect costs, like the costs of promotional offers that are
needed to attract new customers and pull them away from their current provider.
The costs of migrating and activating a large number of new customers must also
be considered, as must the costs of ending the churning customers’ services.
It is obvious that cancellations lead to future revenue losses, but an additional
problem is that the time for up sells might be too short. For instance, the
customer might take out a short contract for basic voice and broadband and then
leave. The time available to sell additional value-added services such as TV and
special content is probably too short if they were not included in the initial
subscription.
High churn rates can endanger the required economies of scale in the network.
For example, based on Ovum’s modeling of UK wholesale offerings, an LLU CSP
must obtain approximately 300 customers per local exchange in order for the
LLU investment to pay off.
The good news is that the “incumbent” provider is in an ideal position to influence
customer loyalty by delivering an excellent performance. Best practice cases
such as Iliad in France show that it is possible to achieve a churn rate far below
1 percent per month.
6 How to generate customer loyalty in fixed markets

7. Most customers would consider
another service provider
Only one in five customers on average say that their current provider is the only
one they would ever consider. This loyalty indicator is lower in mature markets
than in emerging markets. In the UK is it just 7 percent. The reasons are:
• Customers are becoming more demanding and are willing to change their
provider to suit their personal preferences and experiences. They are very
pragmatic.
• Customers increasingly perceive the available offerings as interchangeable.
Figure 3. Customer buying behavior – most
customers consider not only their current provider. Total Brazil China
Customer loyalty today – the “incumbent” CSP is in % in % in %
1 11
in permanent competition.
7 20 14 14
28 27
n=4229 respondents 24 16
49 42 58
Germany United Kingdom United States
in % in % in %
1 1 2
8 16 9 7 4 19
25
32 34
50
44
50
The only provider I would ever consider It is my preferred provider, but not the only one I would consider
Just one of several providers I would consider Not a provider I will stay with in the future Don’t know
How to generate customer loyalty in fixed markets 7

8. People look to a variety of sources
to inform their decisions
The experiences and recommendations of family members and friends is the
most important source of information, especially in Brazil where nearly 70 percent
rate it as the most important influence. This face-to-face communication is
complemented by virtual information from the Internet, and roughly 70 percent
of fixed Internet customers mention these two CSP-independent “neutral”
information sources as the most important. This means that both the good and
bad experiences of existing subscribers influence the buying behavior of potential
customers.
Figure 4. People actively inform themselves
about the best offer from a variety of sources. Total Brazil China Germany United United
Most influencing information sources: Which of in % Kingdom States
the following information sources influenced
you the most with your decision for your current Family or friends 40 68 39 29 38 33
provider? Multiple answers.
n=681 Internet 31 26 27 38 42 26
Base: customers who chose their Internet
provider less than six months ago Advertisements
24 25 14 20 20 36
received
Homepage of
21 9 24 41 23 14
Internet company
TV/Radio 14 27 12 4 11 14
Call centre of the
13 8 26 10 16 7
Internet company
Salesperson of
the Internet 12 7 20 16 6 12
company store
On the other hand, the influence of contact with the CSP should not be
neglected. Overall, 24 percent of customers perceive advertisements as one
of the most important influencers and provider homepages are mentioned by
21 percent. Other channels are less influential, but TV and radio, call centers
and the sales person all have their audience. So the quality of any and all of
these interaction points may be critical to the buying process.
8 How to generate customer loyalty in fixed markets

9. Brand “stickiness” is low
In mature markets, 20 to 25 percent of customers on average are satisfied with
most of the core brand dimensions of their providers, such as reputation,
innovation and customer care. Another 40 percent are merely “somewhat
satisfied”. A quarter of customers claim that they identify with their provider’s
brand more than with other CSPs and another 39 percent agree with this to some
extent. So there is a hardcore of brand enthusiasts but the emotional link with
the majority of the customers is rather weak, and fixed CSPs cannot rely on the
strength of their brand as a key retention tool. Customers in mature markets
demand real performance from their CSPs, not just a good image.
Figure 5. Brand “stickiness” is rather low.
Satisfaction with brand – developed countries (% of customers)
n=2529
Has a good reputation 3 6 19 46 26
Is very innovative 8 6 22 42 23
Has a very appealing advertising 8 9 25 38 19
Is one that you like to be seen using 8 9 27 36 20
Is an Internet provider that I identify
more with than with other brands 5 9 23 39 24
Is one that takes care of its
customers 3 9 22 42 24
Cares a lot about environmental
sustainability 39 6 20 23 12
Takes initiative in social and
cultural life (charity, sponsorship) 37 7 20 25 11
On a scale from 0 20 40 60 80 100
1 = don’t agree at all to
10 = totally agree Don’t know Bottom (1–2) Middle (3–5) Middle (6–8) Top (9–10)
How to generate customer loyalty in fixed markets 9

10. In mature markets most customers
have churn experience
In mature and extremely competitive markets such as Germany, the UK and
the US, most customers have already churned in the past, with 12 percent
changing their provider within the previous six months. In emerging markets
such as Brazil and China, the share of churners is much lower at 1 in 10. In short,
the willingness-to-churn increases with the maturity of the market.
Figure 6. In mature markets most customers
have churn experience. Churn behavior and its Total Brazil China 2
in % Recent in % Recent in % Recent
motivation – top two.
8 switches 37 switches 7 switches
n=4229
34
57
90 91
1
1. Dissatisfied with my former 1. Dissatisfied with my former 1. Interesting promotion offer
provider provider 2. Friends/relatives recommended
2. Interesting promotion offer 2. Interesting promotion offer to change
Germany United Kingdom United States
in % Recent in % Recent in % Recent
12 switches 12 switches 12 switches
32 35 37
1 52 50
55 1 1
1. Dissatisfied with my former 1. Dissatisfied with my former 1. Dissatisfied with my former
provider provider provider
2. Interesting promotion offer 2. Attractive bundled offer 2. Moved into another region
Switched less than 6 months ago Switched more than 6 months ago Never Don’t know
When asked why they churned, the recent switchers gave two main reasons:
• Promotional and bundled offers from other providers. In the UK in particular,
bundling led to extreme shifts in the market shares of different players
(Ovum, The Future of Fixed Broadband, 2008).
• Dissatisfaction with the previous provider’s performance.
The two reasons are sometimes linked, because dissatisfied customers will
naturally be more receptive to competing offers.
10 How to generate customer loyalty in fixed markets

11. Churn triggered
by promotional offers
In mature markets such as Germany, the UK and the US, between 19 and
42 percent of recent churns were motivated by the promotions of competing
CSPs. Churn will not be significant if the competing offer is perceived to be only
5 percent cheaper, but if the perceived price difference is 10 percent or more
then the willingness-to-churn rises dramatically. This high price elasticity is a
clear indication of the increasing interchangeability of the different offerings in
the eyes of customers.
Churn due to promotional offer from competitor (%) Consider churn (% of all customers)
100
Germany Perceived price differences
Churners* 43 of 10% or more trigger churn
All customers 34 80
United Kingdom**
Churners* 19 60
All customers 44
United States**
40
Churners* 26
All customers 39
Germany
*Within last 6 months 20 United Kingdom
**Attractive bundles of competitors is a strong churn trigger United States
0
5 10 20 30 40 50 >50
Perceived cost savings (%)
Figure 7. The first half of the truth – around
40 percent of churn is triggered by promotional
offers from competitors.
How to generate customer loyalty in fixed markets 11

12. Churn owing to dissatisfaction
Dissatisfaction with a CSP’s performance is the strongest motivator for churn,
with around half of recent churners in mature markets citing it as their main
reason for switching. The reasons for dissatisfaction varied widely, but included
the costs of Internet access, customer care service, connection stability, speed
and rate packages.
Churn due to dissatisfaction (%) Reasons for dissatisfaction of recent churners (%)
Cost of Internet 59
Germany access 45
58
Churners* 44 Customer care 62
52
All customers 49 service 41
Stability of Internet 46
54
connection 45
United Kingdom Down/upload 31
46
Churners* 52 speed 43
All customers 47 Offered rate 29
39
packages 21
15
United States Billing 25
18
Churners* 44 Contract 13
28
conditions 7
All customers 36
Quality of fixed 8
21
telephony 13
*Within last 6 months Costs of additional 15
4
(Internet) services 13
5
Germany
Offered bundles 8
11 United Kingdom
Quality of TV 3
4 United States
services 9
0 10 20 30 40 50 60 70
Figure 8. The second half of the truth –
customers churn due to dissatisfaction.
12 How to generate customer loyalty in fixed markets

13. Customer relations decline most strongly
between one and three years
Across all the countries in the survey, the critical period when customers churn
is between one and three years. This is largely because most Internet contracts
last 12 or 24 months, so it seems that customers typically churn at the end of their
contract period. The promise of lower costs, better customer care and superior
Internet connection performance sounds good if the customer has not been
pleased with the service they have received from their current provider.
Figure 9. Managing the customer lifecycle –
strongest decline in the customer relationship Duration of customer relation (%)
occurs between one and three years. 100
Base: n=4229 respondents
80
Total
60 Brazil
China
Germany
40 United Kingdom
United States
20
Critical time window
0
<= 1 <2 <3 <6 6 to 12 1 to 2 2 to 3 3 to 4 4 to 5 >= 5
month months months months months years years years years years
Customer life-time value Positive CLTV
Limited harvesting
Negative CLTV
Time/customer lifecycle
CSPs can therefore defend themselves by creating specific offerings designed
to retain customers who are coming to the end of their contract period. Because
the early phase of a customer’s association with a CSP actually costs the CSP
money (the customer’s payments are still offsetting the cost of acquiring the
customer in the first place), it is a highly efficient use of resources to target
customers whose acquisition costs have already been paid off. Understanding
what drivers these customers are responding to and what their chief sources of
dissatisfaction are is critical in deciding which actions to take to retain them.
How to generate customer loyalty in fixed markets 13

14. What makes a loyal customer?
Overall satisfaction with the provider’s performance plays the dominant role in
the customer’s decision process. Other factors such as the brand image and
switching barriers play minor roles.
The following figure shows the contribution of each satisfaction area to determine
its relative contribution to overall satisfaction, expressed as a percentage.
The numbers indicate the importance of the different drivers across the entire
customer base. Of course, some specific customer groups may have different
priorities.
Customer retention drivers – impact in %
Customer care Service & device
• Status info about Customer Activation portfolio
inquiry care
• Ease of installation
• Time to solve query 16 13 • Technical support
• Competence of staff TV services during activation
2 Bundling • Quality of hardware
4 and software
Billing
8
Costs of
TV services 1 Moments
Costs of 4 of truth Quality of
telephony 20 Internet
Cost and billing access Network and
• Contract duration, 12 service quality
transparency & • Speed while browsing
flexibility Costs of
3 • Download and upload
Internet 1
• Personal fit of rate speed
packages 16 Quality of telephony
• Matching the promised
• Cost of additional Quality of TV services speed
services Contract
conditions
Figure 10. What makes a loyal customer:
a 360° experience at all touchpoints.
n=2529
14 How to generate customer loyalty in fixed markets

15. In our analysis, we split the drivers of customer satisfaction into four key
categories:
• Service and device portfolio: From the customer perspective, ease of
activation for services is far more important than the portfolio itself. The
dominant drivers are the ease of installation, the quality of support provided
by the CSP and the quality of the hardware and software of the delivered
modems, routers and set-top-boxes. The right bundling strategy is also
important, including the availability and quality of TV services.
• Network and service quality: Quality is dominated by the perception of the
quality of Internet access. The most important items are the browsing speed,
the download and upload speed and whether the promised speed is achieved
in real life. The upload speed is just as important as the download speed,
thanks to changing user behavior in Web2.0, where people increasingly post
their own content such as photos. The quality of telephony is less of a
concern, provided certain minimum requirements regarding voice quality and
features are met. TV quality is not a strong factor as yet, partly because of low
penetration.
• Cost and billing: Customers place a high importance on contract conditions.
The contract duration, the transparency of the conditions and the ability to
change the service bundle and rates are all important to their satisfaction.
Furthermore the personal fit of the Internet rate package and the cost of
additional items should be taken into account. It is not just about the offered
price level, it is about the price structure of the provider and the ability to
achieve a fit with the user’s personal preferences and usage pattern. On top of
this, billing is very important, even in times of “simple” flat rates. The accuracy,
understandability, delivery method and payment conditions of the bill, as well
as the billing period, are all equally important.
• Customer care: Customers value the provider’s ability to solve any problems
in a systematic and timely way. They want transparency about the status of
their inquiry as well as a prompt solution. The perceived competence of the
provider’s staff is monitored closely by customers, since it is also one of the
few occasions when the customer has personal contact with the CSP.
Overall, cost and billing is the most crucial area for customer satisfaction,
followed by network and service quality. The portfolio, including the activation
process and the perceived performance in customer care are of nearly equal
importance. It can be seen clearly that customers are not solely focused on price
but on the price-performance ratio. The quality of Internet access is more
important than the cost associated with it and the quality and price of telephony
and TV are of nearly equal importance. Overall the portfolio, quality, contract
conditions and care services all massively outweigh cost alone in the customer’s
priorities.
How to generate customer loyalty in fixed markets 15

16. Internet quality, costs and customer service
boost customer retention
In order to enhance customer satisfaction most effectively it makes sense to act
in areas that are the most important to customers and where there is the biggest
perceived room for improvement.
By comparing the previous results against the percentage of satisfied customers
in each area, the areas of highest relevance and lowest satisfaction are:
• Contract conditions
• Quality of Internet access
• Customer care
• Costs of Internet usage
• Activation process
16 19
Figure 11. Internet quality, costs and customer
service are the major levers to boost customer 20%
retention. Quality of Internet access 24
41
Note: Impact of single items adds up to Contract
100 percent. Customer care service
Costs of Internet usage Activation process
Impact
10%
Billing
Bundled services
Quality of fixed telephony
Type of TV services
Costs of TV services
Quality of TV services
0%
0% 40% 60% 100%
Satisfaction
% of satisfied customers
Other areas may be less urgent, but they should not be ignored. Some may
become more important in the future – TV is a good example here. In other
areas, dropping below certain performance thresholds can attract negative
attention from customers and thereby increase their impact on satisfaction,
as well as the workload on the help desk. Still others vary in importance
depending of the customer’s lifecycle phase. Bundling options might be of more
interest as contracts come up for renewal, for example. In addition, specific
customer segments have focal points that are different from those of the average
customer.
16 How to generate customer loyalty in fixed markets

17. Service and device portfolio
The activation process and bundling strategy call for special attention here.
The service and device portfolio affects customer satisfaction at 19 percent in
mature markets. Within that, the service activation process has the largest
potential to enrich the customer experience. Activation is about the quality of
hardware and software for customer premises equipment (CPE), installation and
configuration simplicity and also about the time needed to keep everything
running well. Interestingly, customers are especially dissatisfied with the technical
support during activation, so providers could think about providing more personal
assistance, even if this costs more. Since the impression of trouble free activation
is crucial to overall satisfaction – and thus personal recommendations to potential
new customers – activation support can be an effective customer touch point.
Customer concerns regarding activation are understandable, since in some
countries 20 percent of all phone and broadband lines are not installed correctly
at the first attempt (Oliver Wyman 2007).
Next come the services themselves, including the quality of the content and
value-added services. TV customers want better special interest packages
beside the mainstream channel packages, as well as better value-added services
such as video-on-demand, games and recording functionalities. Aside from the
avoidance of churn, those areas also provide good upsell opportunities and the
demand is there.
There is still unexploited potential in service bundling. People especially miss the
value-add of a bundle beyond the price and the one-stop-shopping advantage.
The fit of the bundle to their individual needs is crucial. Therefore more flexible
and tailored bundling options offer possible competitive advantages for CSPs.
All in all, it is more important to the majority of customers that the basic Internet
and voice products are made available quickly and easily than it is getting more
sophisticated services.
16 19
Figure 12. Service and device portfolio –
activation process and bundling strategy need 20%
special attention. * Bundle customers only 24
** TV customers only 41
Activation
Note: Impact of single items adds up to
100 percent.
Technical
activation support Quality of hardware
Need fit of setup package
Quality of special
interest packages** Ease of installation
Delivery time of hard & software
Impact
10% Time until access worked
Quality of VAS
(VoD, games, PVR)** Number of channels**
Need fit of services in bundle*
Value add of the
bundle (instead of
separated services)* Content quality and
Value added Services
0%
0% 40% 60% 100%
Satisfaction
% of satisfied customers
How to generate customer loyalty in fixed markets 17

18. Network and service quality
Perceived Internet speed is the most crucial factor in service quality, which
overall accounts for 25 percent of the customer’s quality perception in mature
markets. Many users think that there is a gap between the bandwidth that was
promised to them and the one they really get. Only 30 percent of the customers
are satisfied with the fulfillment of the promise. In addition, satisfaction with the
speed while browsing, downloading and uploading is below 40 percent. This is
a clear sign that the demand for bandwidth is not saturated, even in mature
markets with widespread ADSL and cable infrastructure.
In contrast to previous studies, changing user behavior in the context of Web2.0
is driving the demand for higher upload speeds, which calls the long-term
suitability of strongly asymmetric technologies such as ADSL into question.
Security has also become a hot topic and now has a significant impact at low
satisfaction ratings. Security solutions can therefore be an effective differentiator.
The quality of telephony is less critical, although satisfaction values below
60 percent indicate some room for improvement. One explanation for this might
be the increasing penetration of VoIP. CSPs should avoid compromising on the
voice quality and stability of calls, since voice as a basic service is not negligible
for customer satisfaction.
16 19
Figure 13. Network and service quality –
perceived Internet speed is the most crucial 20%
factor. 24
41
Note: Impact of single items adds up to Download speed
100 percent. Browsing speed Internet quality
Upload speed
Matching the promised bandwidth
Stability of the Internet connection
Security solutions
Impact
10% Availability and call setup time*
Clarity and sharpness of TV**
Voice quality* Stability of calls*
* Bundle customers only
** TV customers only
0%
0% 40% 60% 100%
Satisfaction
% of satisfied customers
18 How to generate customer loyalty in fixed markets

19. Cost and billing
With a contribution of around 40 percent, cost and billing has the biggest impact
of all on customer satisfaction. A certain dissatisfaction with having to pay for
things is natural, so the point for the CSP is to increase satisfaction and
differentiate in the market without compromising price levels and margins.
The various relevant parameters can be grouped into contract conditions, pricing
structure and billing.
About 30 percent of customers are satisfied with contract conditions such as
duration, transparency and flexibility. Customers do not like tying themselves into
something they might not find appropriate after a while, so there is an opportunity
for more commitment-free contracts.
The pricing structure by nature is complex, but there are two key points where
providers could match their offering more closely with their customers’
preferences. First, customers complain about the cost of hardware and technical
assistance, which they rather take for granted. Second, they don’t like paying
extra for additional items, such as value-added services, additional TV services
and special content packages. As a consequence CSPs can gain competitive
advantages with a revised bundling and upselling strategy.
Billing is very important to customers, even in times of flat rates, and around half
of customers are satisfied. Therefore billing is not a critical issue, but providers
might think about improvements, especially in making their bills easier to
understand.
16 19
Figure 14. Cost and billing – customers value
improvements in contract conditions and pricing 20%
structures the most. * Bundle customers only 24
** TV customers only 41
Note: Impact of single items adds up to
100 percent.
Voice: Line rental
Contract conditions One time Internet activation costs
Period of contract Monthly Internet costs
cancellation Pricing structure
Contract Voice: Rate package in general
Impact
10% Costs of technical duration Personal fit of Internet rate package
assistance
Transparency Single bill
Flexibility within
contract period of conditions Understandability of bill
Costs of HW Billing
Promotional offers
Payment conditions
Costs of additional VAS
Accuracy of bill
Costs of additional
TV services Delivery method of bill
Costs of special Monthly costs for TV Price of bundled services
content packages Costs of HW (set-top box)
0%
0% 20% 40% 60% 100%
Satisfaction
% of satisfied customers
How to generate customer loyalty in fixed markets 19

20. Customer care
Customer care achieves low overall scores, and customers want faster problem
solving and greater transparency regarding the status of their queries. The single
most promising area for improvement is help line waiting times, which effectively
means improving call center efficiency. If providers can speed up customer care
processes by providing the necessary information and tools for their agents,
they can differentiate in competition as a service champion. Friendliness is less
important than a speedy resolution.
CSPs can also improve their Web sites, including customer self service facilities.
For one in five customers the provider’s homepage is the most important source
of information. Improving the quality of contact here and keeping customers up to
date is a promising option to lower churn and stimulate upsells.
16 19
Figure 15. Customer care – improvements in
solving time and status transparency are key. 20%
24
Note: Impact of single items adds up to 41
100 percent.
Status info Time to solve query
about inquiry
Competence of staff
Achieved outcome
Customer
Impact
self service Friendliness of staff
10%
Waiting Managing trouble with any
times at Easy info of the bundled services
helpline access on
website
* Bundle customers only
0%
0% 40% 60% 100%
Satisfaction
% of satisfied customers
20 How to generate customer loyalty in fixed markets

21. Challenges and opportunities
for CSPs
Customers are in search of a better experience when they churn. Any strategy
that aims to improve the customer experience should therefore target resources
at those areas that are most important to subscribers.
CSPs supply intangible products and they have low levels of personal interaction
with their customers. Therefore the performance during the “moments of truth“
(Booz, Allen & Hamilton) is crucial. These are the moments in which the customer
really experiences the quality of the service, such as activation, usage, billing and
care. These points determine the quality of the relationship with the customer.
Providing a superior and differentiated service that is adapted to specific
customer needs is a competitive advantage that is hard for competitors to copy.
CSPs have lots of opportunities to reduce churn by focusing their resources on
managing these “moments of truth“.
1. Service and device portfolio
Greater flexibility and tailored service bundles can better match individual
customer needs. Additional bundling options should include options that might
previously have been perceived as add-ons, such as special interest content,
video-on-demand, games, convenience features for TV usage, premium support
and security.
Automating and simplifying the activation process, including device management,
ensures timely and right delivery. Since trouble-free activation is of outstanding
importance, high-quality technical assistance and proactive care is an option that
ensures that this moment of truth does not lead to disappointment.
2. Network and service quality
The aim should be to improve the perceived Internet speed in a cost-efficient
way. As the demand for bandwidth is not saturated, it is essential to bring the fiber
closer to the curb or the building. The increasing need for upload speed calls for
mass deployments of VDSL as symmetric technology. In addition, competitive
access providers fuel their growth by boosting their share of unbundled lines,
rather than just taking wholesale capacity, in order to remain in full control of the
quality provided to their customers.
Security solutions are key differentiators and this should be pointed out in
marketing messages.
In telephony, further improvements could be made in voice quality and call set up
time, especially if VoIP services are provided.
How to generate customer loyalty in fixed markets 21

22. 3. Cost and billing
CSPs have an opportunity to free up customers to enable easier migration
between tariffs and bundles. One option is to let customers choose between
monthly, bi-annual or annual subscriptions, for example. Despite the business
risks associated with lowering the commitments placed on customers, there are
already successful examples in the market, including German CSP Hansenet,
which has successfully pursued this strategy.
Another chance to improve customer experience is to provide personalized top
up management for content and value-added functionality. The challenge for
CSPs is to offer choices of chargeable items for a wide target audience on top of
static, all-inclusive, flat rate bundles. Charging on a flexible à la carte basis is
therefore an option. Customers can for example choose single channels they
would like to subscribe to and pay per channel. The customers’ perception is that
they only pay for what they are actually using.
4. Customer care
CSPs can adapt customer care to different target segments and query types.
This includes enhanced self-care options. It also provides an excellent means to
boost efficiency using seamless information flow through an integrated systems
infrastructure. This will reduce waiting times and solve queries “right first time”.
This requires the arming of customer support personnel with all relevant
customer and network information.
Care can be proactive, with end-to-end automation of customer care processes.
CSPs can position themselves as a “service champion“ in marketing
communications, taking into account that fast problem resolution is often more
important for the relationship with the customer than zero failure.
22 How to generate customer loyalty in fixed markets

23. Customer insight holds the key
The ultimate goal is the “mass individualization” of CSP offerings – from service
definition to customer care – as if they are designed for each customer
individually. This requires great insight into individual behavior and preferences.
This approach also allows early churn prediction so that appropriate retention
measures can be taken in good time. Successful customer-centric CSPs liberate
their customer information from data silos and bring it together so it can be
accessed by all systems and different organizational units. In this way the
individual customer’s experience can be continuously optimized and they are
unlikely to churn.
How to generate customer loyalty in fixed markets 23

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