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Market Research & Analysis Sharing:
Churn Analysis Tracking
David Lowrie
BT Wholesale, Marketing Manager
“Specialist ISP” Workshop – 20th June
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© MORI 2005. Not to be used, reproduced or shown to any third party without the prior written permission of MORI
End User Churn in the GB Broadband Market
Presentation to ISP Forum
June 2005
David Lowrie
3
Since October 2004 Broadband has overtaken Narrowband
0
10
20
30
40
50
60
Jan '03 Apr '03 Jul '03 Oct '03 Jan '04 Apr '04 Jul '04 Oct '04 Jan '05 Apr '05
Narrow band only All Broadband All internet at home
Base: circa 4,000 interviews per month May 2004 – 1,940 interviewsMORI Technology Tracker January 2003 – May 2005
%
35%
20%
55%
Wave 1
Wave 2
Wave 3
4
The number of households with broadband has increased by 2.4 million in the last 6 months
0
2
4
6
8
10
12
14
Jan '03 Apr '03 Jul '03 Oct '03 Jan '04 Apr '04 Jul '04 Oct '04 Jan '05 Apr '05
Narrow band only All Broadband All internet at home
Base: circa 4,000 interviews per month May 2004 – 1,940 interviewsMORI Technology Tracker January 2003 – May 2005
Households (million)
8.4
4.8
13.2
Wave 1
Wave 2
Wave 3
5
Broadband Users: Users are more likely to be male and live in the South
All population All home internet users
Use broadband at home
Base: 4,171 2,200 1,382
% % %
Gender
Male 48 52 57
Female 52 48 43
Age
15-34 32 38 42
35-54 34 42 42
55+ 34 20 16
Region
North 33 31 29
Midlands 31 30 30
South 36 39 40
Base: All adults aged 15+ (4,171), MORI Tech Tracker, May 2005
6
3%
16%Likely to migrate from dial up to broadband over next 12 months
Non internet users likely to go straight to broadband*
Base: All respondents (2,100), MORI general public omnibus, May 2005
Growth in Broadband set to continue – could be as many as 4.6 million new lines over next 12 months
19% of the public expect to adopt broadband over
next 12 months
46%
37%
17%
Dial-up internet
users
Broadband user
Non internet
user
7
73%
38%
75%
38% get additional bundled services beyond internet and basic broadband services as part of their broadband package
Basics broadband services
Additional bundled services
Using the internet
Base: All respondents (999), May 2005
Q Which of the following services do you get from your main broadband supplier (i.e. services which are part of your packages)?
8
Phone line is the most common bundled service
Base: All respondents (999), May 2005
Q Which of the following services do you get from your main broadband supplier (i.e. services which are part of your packages)?
Using the Internet (75%) Basic Broadband services (73%) Additional bundled (38%)
E-mail accounts 70% Hardware (modem and router) 49% Phone Line 29%
Security 36% Downloads (unlimited) 38% Phone line with special tariffs 17%
Web hosting facilities 25% Free customer support 37% Digital TV with extra channels 11%
Instant messaging 21% Extra storage 16%
Online gaming 7% Downloads (limited) 15%
Other telephone services 4% Extra bandwidth 3%
Web logs 4%
Pay-as-you-go 2%
9
7% would pay extra for Digital TV with extra channels
Base: All respondents (999), May 2005
Q Which of the following services would you pay extra for?
Using the Internet (8%) Basic Broadband services (12%) Additional bundled (11%)
E-mail accounts 1% Hardware (modem and router) 1% Phone Line 2%
Security 4% Downloads (unlimited) 4% Phone line with special tariff 3%
Web hosting facilities 1% Free customer support 2% Digital TV + extra channels 7%
Instant messaging 1% Extra storage 5% Digital TV (basic) 4%
Online gaming 2% Downloads (limited) 0%
Other telephone services 2% Extra bandwidth 2%
Web logs 0%
10
Just under one half downloading music
Base: All respondents (999), May 2005
Q Which, if any of these do you or members of your household use the internet for whilst at home?
Communication (97%) Obtaining Information (96%) Rich Media (81%)
Send/receive email 94% General surfing the internet 90% Download music 49%
Send/share photos 60% Finding information (personal) 81% Listen to radio 47%
Chatting 58% Finding information (work) 51% Playing games online 45%
Send/share video clips 21% Finding information (school) 45% Download computer games 26%
Phone calls on internet 6% Download movies 14%
Watch TV 10%
11
More than half downloading software
Base: All respondents (999), May 2005
Q Which, if any of these do you or members of your household use the internet for whilst at home? Continued….
Transactions (80%) Software (58%)
Banking 77% To download software 58%
Real time gambling/trading 27%
12
Usage of Suppliers in the Market
13
23%
19%
15%
10%
10%
7%
4%
11%
Market share in line with October 2004
NTL
October 2004 May 2005
Q Which is your main supplier for broadband services?
BT (All brands)
Base: All respondents (1,003) October 2004, (999) May 2005
Telewest/Blueyonder
AOL
Freeserve/Wanadoo
Tiscali
Pipex
Other
Don’t know (1%)
22%
19%
15%
10%
10%
8%
NTL
BT (All brands)
Telewest/Blueyonder
AOL
Freeserve
Tiscali
Pipex (2%)
OtherDon’t know (1%)
13%
14
Over half have stayed with their current supplier for over a year
10%
11%
18%61%
Base: All respondents (999), May 2005
Q And how long have you been using your current supplier?
3 months or under
4 – 6 months
7 months – 1 year
Over a year
May 2005
5046
61
0
10
20
30
40
50
60
70
80
90
100
May-04 Oct-04 May-05
Over a year%
15
92%
90%
85%
84%
83%
95%
Reliability, speed and costs remain the three most important factors when deciding which broadband supplier to use
Speed of connection available
Easy to sign up
Reliable connection
Cheap usage costs
Quality of customer service
Cheap installation costs
% very/fairly important
Q How important are the following factors to you when deciding which suppliers of broadband services to use?
Base: All respondents (999), May 2005
Importance Change
Oct ’04 –
May ‘05+
-2
-2
-1
-3
-2
-2
16
73%
66%
56%
54%
37%
36%
83%
Bundled packages important for around one third
Availability of free modem
Better deal on telephone/digital TV package
Suppliers has good reputation
Cost of phoning helpdesk
Length of contract
Content provided by broadband supplier
% very/fairly important
Q How important are the following factors to you when deciding which suppliers of broadband services to use? Continued…
Base: All respondents (999), May 2005
Importance Change
Oct ’04 – May ‘05
+
-2
-1
+1
+3
0
-4
Billed on my ordinary phone or cable bill 0
17
Loyalty
18
24%
37%
27%
5%4%
Around nine in ten broadband users are satisfied with their current supplier – no change from the levels of satisfaction seen in 2004
Extremely satisfied
Q Which of the following best describes your overall satisfaction with your broadband supplier?
Very satisfied
Base: All respondents (999), May 2005
Fairly satisfied
Neither/nor
Fairly dissatisfied
Very dissatisfied (1%)Extremely dissatisfied (1%)
8989 88
6 6 7
0
10
20
30
40
50
60
70
80
90
100
May-04 Oct-04 May-05
Satisfied Dissatisfied%
19
Q Which of the following best describes your overall satisfaction with your broadband supplier?
7%
7%
8%
6%
88%
88%
88%
91%
85%
90%
7%
5%
DissatisfiedSatisfied
All (999)
Women (435)
Men (564)
Broadband speed less than 512kbs (332)
Broadband speed more than 512kbs (499)
Those with faster broadband are slightly more satisfied than those on slower bandwidth
Base: Varies (see above) May 2005
Over 55 years old (128)
Satisfied Change Oct ’04 – May ‘05
+
-1
-1
-1
0
-1
-1
20
Q Which of the following best describes your overall satisfaction with your broadband supplier?
20%
32%
88%
70%
55%
97%
7%
1%
DissatisfiedSatisfied
All (999)
Likely to switch supplier (167)
Disloyal users (164)
Less than two thirds are satisfied among those who are likely to switch
Base: Varies (see above) May 2005
Unlikely to switch supplier (584)
Satisfied Change Oct ’04 – May ‘05
+
-1
-7
-10
+2
21
Q Which of the following best describes your overall satisfaction with your broadband supplier?
3%
9%
9%
88%
93%
85%
94%
83%
7%
1%
DissatisfiedSatisfied
All (999)
Telewest/Blueyonder (145)
Those who use NTL as a supplier tend to be least satisfied, whilst Telewest/Blueyonder are most satisfied
Base: Varies (see above) May 2005
AOL (104)
Satisfied Change Oct ’04 – May ‘05
+
-1
-2
-5
0
BT all brands (190)
NTL (221)
+4
22
11%
88%
11% have ever switched supplier compared to 6% 12 months ago
Yes
May 2005
Q Have you ever changed the supplier of your broadband connection?
No
Base: All respondents (999), May 2005
106
11
9088 88
0
10
20
30
40
50
60
70
80
90
100
May-04 Oct-04 May-05
Yes No%
23
6%10%
20%
19%
40%
5%
Very little change in the likelihood to switch broadband supplier over the next 12 months. 58% are unlikely to switch
Q How likely are you to switch broadband provider in the next 12 months?
Neither/nor
Very likelyDon’t know
Fairly unlikely
Fairly likely
Very unlikely
Expect to discontinue
(1%)
Base: All respondents (999), May 2005
1518 17
5953
58
0
10
20
30
40
50
60
70
80
90
100
May-04 Oct-04 May-05
Likely Unlikely%
24
Why are People Switching?
25
28%
23%
20%
16%
54%
Cost is the most important consideration among likely switchers
High cost/too expensive
Poor customer service/help desk
Cheaper deal from other suppliers
Moving home
Base: All respondents who are likely to switch supplier in the next 12 months (167), May 2005
Change Oct ’04 – May ‘05
+
-10
-15
+8
+5Faster connection from other supplier
0
Q Which of the following are likely to influence your decision to change supplier over the next 12 months?
26
25%
25%
18%
4%
37%
Among users who have actually switched supplier in the past, nearly four in ten said a cheaper deal from another supplier was the main reason. Moving house and poor quality service are still catalysts for change
Moved house/flat
Cheaper deal from other suppliers
Poor quality service
Faster connection from other supplier
Base: All respondents who have switched supplier in the past (113), May 2005 NOTE: SMALL BASE SIZE
Change Oct ’04 – May ‘05
+
-2
-2
-1
-1
-17
Q Which of the following influenced your decision to change supplier?
Lack of availability
27
31%
30%
44%
Four in ten could be encouraged to switch supplier if another supplier provided broadband basics that interested them.
Additional bundled services
Basic Broadband services
Using the Internet
Base: All respondents (999), May 2005
Q Which of these services (provided by another supplier would encourage you to switch to another provider?
28
Download limits and customer support are important reasons to change supplier
Base: All respondents (999), May 2005
Q Which of these services (provided by another supplier would encourage you to switch to another provider?
Basic Broadband (44%) Additional bundled (31%) Using the internet (30%)
Downloads (unlimited) 28% Digital TV with extra channels20% E-mail accounts 17%
Free customer support 26% Phone line + special tariffs 18% Security 8%
Extra bandwidth 22% Digital TV (basic package) 8% Web hosting facility 8%
Hardware 19% Phone line 6% Instant messaging 7%
Extra storage 10% Other telephone services 5%
Downloads 1% Online gaming 5%
Pay-as-you-go 1% Web logs 2%
29
19%
9%
10%
6%13%
42%
22%
7%
15%11%
17%
4%6%
Switching still appears to be from the incumbent telephony and cable suppliers to other suppliers
BT (all brands)
Previous supplier Current supplier
Q Which supplier of broadband services did you use before your current supplier?
Telewest/ Blueyonder
Freeserve/ Wanadoo
AOL
Don’t know
Other
NTL
BT (All brands)
Telewest/Blueyonder
Freeserve/Wanadoo
Other
Base: All respondents who have switched supplier in the past (113), May 2005 NOTE: SMALL BASE SIZE
AOLNTL
30
What Can Suppliers Improve On?
31
The top three most important factors to consider when deciding which broadband supplier to use continue to be costs, reliability and the speed of connection.
Reliable connection
Speed of connectionavailable
Availability of a free modem
Q Three most important factors when deciding which suppliers of broadband services to use?
Cheap usage costs
62%
25%
19%
16%
16%
83%
56%
46%
23%
14%
10%
20%
43%
73%
All Likely switchers
Base: All respondents (999) and all who are likely to switch supplier in the next 12 months (167), May 2005
Cheap installation costs
Quality of customer service
Supplier has good/trustworthy reputation
All Change Oct ’04 – May ‘05
+-5
-1
+3
-3
+5
+1
-1
32
48%
26%
25%
18%
15%
6%
71%
Nearly three quarters of likely switchers say that a better deal from their current supplier would stop them from switching. Speed, reliability and customer service have all become more important
Increase the speed
Offer bundled packages
Cheaper /lower price/ deals
Improve customer service/helpdesk
Unlimited downloads
Improve reliability/connection
Base: All respondents who are likely to switch supplier in the next 12 months (167), May 2005
Change Oct ’04 – May ‘05
+
+7
+29
+17
+15
+13
-
Nothing +1
Q What could your current supplier do, if anything, to avoid you changing to another provider?
33
35%
26%
25%
12%
11%
7%
47%Improved availability/ reliability/connection
Cheaper /lower price/ deals
Increased speed
Not limit use on downloads
Improved customer service/helpdesk
Base: All respondents who have switched broadband supplier (113), May 2005
Change May – Oct
’04+
+8
+21+10+12 -
+7Nothing
-
Q What could your previous supplier have done, if anything, to avoid you changing to another provider?
Nearly half of those who have switched in the past said that a better deal from their previous supplier would have stopped them from switching. Again reliability is increasingly an issue
Offer bundled packages
34
Around two thirds of users say a reliable service and ease of use are what they like most about their current service.
Reliability/No problems
Speed
Good/helpful customer service
Q What aspects of your current service do you most like?
Easy to use
60%
42%
37%
32%
26%
80%
59%
43%
44%
39%
28%
33%
57%
61%
All Likely switchers
Base: All respondents (999) and all who are likely to switch supplier in the next 12 months (167), May 2004
Good/cheap price
Good quality service
Unlimited downloads
AllChange
May – Oct ’04+
+49
+24
+39
+25
+32
+26
+15
35
Likely switchers are much more likely than non switchers to mention costs, customer issues and speed as things they like least about their current connection
Poor customer service/helpdeskDifficult to access helpdesk
Poor/unreliable e-mails
Q What aspects of your current service do you least like?
High cost/too expensive
14%
7%
7%
4%
3%
49%
25%
21%
17%
24%
14%
3%
12%
21%
All Likely switchers
Base: All respondents (999) and all who are likely to switch supplier in the next 12 months (167), May 2005
Poor connection/unreliable
Speed
Poor quality service
All Change
May – Oct ’04+
+2
0
+3
-2
-2
0
-4
36
Around two thirds of broadband users mention price as an area suppliers can improve on. Speed of connection and the reduction of spam are potentially areas that suppliers can differentiate on
46%
31%
31%
30%
19%
60%
53%
31%
27%
42%
43%
28%
35%
66%
All Likely switchers
Speed
Reduction of spam/ pop-ups
Customer communication/ information
Q What aspects of service can broadband suppliers improve on?
Price
Base: All respondents (999) and all who are likely to switch supplier in the next 12 months (167), May 2005
Virus protection
Reliability of connection
Customer service/ helpdesk
AllChange
May – Oct ’04+
+30
+26
+31
-
+23
+14
+14
37
Conclusions
38
Context
The Broadband market has shown significant growth since October 2004. Broadband has overtaken narrowband as the main form of access to the internet from the home
Growth in broadband is set to continue, we estimate there could be as many as 4.6 million new lines over next 12 months
There are a range of different packages offered to the market. Around two in five users (38%) get additional bundled services beyond internet and basic broadband services.
This offers potentially an opportunity for new “triple play” providers. The Phone line is the most common bundled service and 7% would pay extra for Digital TV with extra channels
39
Suppliers
NTL, BT and Telewest remain the dominant players with more than half of the market.
The market is maturing, over half of broadband users have had broadband in their homes for more than a year an 8% increase compared to the previous wave
Over half have stayed with their current supplier for over a year while 11% have ever switched supplier compared to 6% 12 months ago
The rate of churn appears to be lower however. More people have switched as broadband has been around for longer
Reliability, speed and costs remain the three most important factors when deciding which broadband supplier to use
40
Loyalty
Most customers are satisfied - around nine in ten broadband users are satisfied with their current supplier
Subscribers in the Telewest region still show highest levels of loyalty
Catalysts for change remain moving house and poor quality service. Improving download limits and customer support are important reasons for changing supplier
Likely switchers are much more likely than non switchers to mention costs, customer issues and speed as things they like least about their current connection
Improving customer support and a better deal on connection speeds appear to be key areas of focus to maintain loyalty
© MORI 2005. Not to be used, reproduced or shown to any third party without the prior written permission of MORI
Broadband Loyalty
Source: BT Wholesale End-User
Customer Satisfaction Programme
42
% of business respondents who claim to have switched Broadband supplier – monthly results
Have you ever changed the supplier of your Broadband connection?
9%
15%
19%
15%16%
14%
12%
0%
5%
10%
15%
20%
Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05
Perc
enta
ge
Base: Sept: 214 Oct: 178 Nov: 171 Dec: 171 Jan: 173 Feb: 157 Mar: 189
43
% of business respondents who claim to have switched Broadband supplier – 3mra analysis
Have you ever changed the supplier of your Broadband connection?
9%
12%
14%
16% 17%
15%14%
0%
5%
10%
15%
20%
Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05
Perc
enta
ge
Base: Sept: 214 Oct: 392 563: 171 Dec: 518 Jan: 514 Feb: 501 Mar: 519
Note: Sept is a monthly result. Oct is based on 2mra.
44
Reasons for change – January to March 2005
Why did you change supplier?
“My IT expert recommended another SP’s services, as he found them reliable”
“Not long before moving office, we were having problems with our SP’s service – so we took the
opportunity to change”
“My previous employer supplied me with the link and I am no longer with them”
“Because of VPN issues – they would not allow me to connect to a company network”
“My SP could not offer me the e-mail options I required for my business”
“We moved premises – it was easier that way”
45
Reasons for change – October 2004
“Because it was recommended to me by my IT company”
“After being with my Service Provider for six months my line suddenly stopped working and was out of action for eight
weeks ”
“It was the speed and connection. I kept losing the connection”
“When we moved offices we brought in a new IT technician”
Why did you change supplier?
“I get a faster service for the same old price”
“They were cheaper and I find I can get through to the Helpdesk easier”
“The price and the availability of static addresses”
46
Likelihood of being with SP in 12 months
Base: 500 (3mra data)
0
10
20
30
40
50
1,2 3,4 5,6 7,8 9,10
%
How likely are you to be a customer of X Broadband service one year from now?
1 = ‘not at all likely’, 10 = ‘very likely’
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