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TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009.pdf
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TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
1Financial Services, Consumer Electronics and Telecom Operators
Report on Loyalty, (Potential)
Churn and Testimonials 2009
TOTE-M Consumer Research
TOTE-MVan Diemenstraat 3141013 CR Amsterdam, the Netherlandst +3120 420 77 80e nl.info@tote-m.com
Index
Introduction 3
The use of Testimonials 11
Financial Services 15
Consumer Electronics 31
Telecom Operators 47
Conclusions & Recommendations 63
Copyright © 1994-2009 TOTE-M 2
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
2Financial Services, Consumer Electronics and Telecom Operators
Introduction
TOTE-M Consumer Research
Report on Loyalty, (Potential) Churn
and Testimonials 2009
About TOTE-M
An independent management consulting firm in
Customer Management founded in 1994
40 consultants, offices in the Netherlands and Belgium
Partners: G-CEM, Smith+co, MarketResponse
50% owner of ?Next! Coaches
The number one partner for designing and implementing
personal, memorable and enduring customer
interactions
Our clients recommend us because our consultants are
competent, independent and involved: NPS +31%
Well known for our results, publications, research,
masterclasses, DOC and jury member of CRM Awards,
PON/OM Outsource Awards, Global CEM Awards
Copyright © 1994-2009 TOTE-M 4
Intr
od
uctio
n
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
3Financial Services, Consumer Electronics and Telecom Operators
Our mission and vision
Our mission is to create, facilitate and secure valuable
encounters. Success of our clients is central in reaching
this goal
Our vision:
The future belongs to organizations that are able to create
valuable and authentic encounters
They have impassioned customers, employees and
shareholders
Valuable encounters are personal, memorable and
enduring. The secret is the ‘click’
Connecting the customer and the organization is
fundamental for each valuable encounter
Copyright © 1994-2009 TOTE-M 5
Intr
od
uctio
n
Our brand values
Personal
From contact to relationship (CRM)
Know your most important
customers
Memorable
From need to experience (CEM)
Captivate your most important
customers
Enduring
From moment to lifecycle (CLM)
Bind your most important customers
Copyright © 1994-2009 TOTE-M 6
Gratify
Satisfy
Neutral
Bad
Horrible
PPGPain –
Pleasur
e Gap
Problems
Use
Orientation
PurchaseNew needs
Intr
od
uctio
n
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
4Financial Services, Consumer Electronics and Telecom Operators
About the research
This survey was conducted by MarketResponse among a Dutch nationwide weighted sample (n=1.523). The minimum age of the respondents was 16.
The survey was conducted in accordance with the European research guidelines (Esomar), which state that anonymity must be guaranteed and that personal information may not be passed on to third parties.
The survey was weighted by: Sex
Age
Household size
Education
Internet usage
The research focuses on three branches:
Financial Services: retail banking sector
Consumer Electronics: multimedia product vendors
Telecom Operators: (mobile) telecom, cable and internet service providers
Copyright © 1994-2009 TOTE-M 7
Intr
od
uctio
n
Terminology
Churn:the number of individuals or items moving out of a business over a specific period of time
Loyalty: the number of individuals staying at a business over a specific period of time
Testimonial:a written or spoken statement about the virtue of some product, service or brand
First time right: measure for the due date flawless delivery of a product or service in that specific branche
Copyright © 1994-2009 TOTE-M 8
Intr
od
uctio
n
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
5Financial Services, Consumer Electronics and Telecom Operators
Net Promoter Score (NPS)
The NPS (Reichheld, 2003) is frequently used to gain insight into customer loyalty
The NPS method measures customer loyalty by:
Recommending seems to be obligation-free, but in fact, it is not. Recommenders put their reputations at stake.
Copyright © 1994-2009 TOTE-M 9
Asking ‘Would you recommend company X to your friends, colleagues and
relatives?’
Scoring the answers on a 11-point scale (0 = absolutely not; 10 = yes,
absolutely)
Calculating the net score by subtracting the number of 0 to 6 scores (the
detractors) from the number of 9 and 10 scores (the promoters)
Detractors Passives Promoters
Intr
od
uctio
n
Customer life cycle
This report is based on the TOTE-M customer life cycle model. This
model sequentially describes each step from the start to the
extension of the customer relationship and/or churn. This research
focuses on loyalty, (potential) churn and the use of testimonials
during orientation and (re)purchasing covering all phases.
Copyright © 1994-2009 TOTE-M 10
Orientation
Purchase
Use
New needs
Problems
Intr
od
uctio
n
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
6Financial Services, Consumer Electronics and Telecom Operators
The use of testimonials
TOTE-M Consumer Research
Report on Loyalty, (Potential) Churn
and Testimonials 2009
Only a fraction of testimonial users actually write a
testimonial
Copyright © 1994-2009 TOTE-M 12
45%
55%
Testimonial usage
66%
45%
6%
0% 20% 40% 60% 80%
Reads testimonials
Gives ratings
Writes testimonials
UsersNon-users
Te
stim
on
ials
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
7Financial Services, Consumer Electronics and Telecom Operators
51%
45%
34%
15%
0%
10%
20%
30%
40%
50%
60%
Consumer electronics Holidays Films, books & music Financial products & services
Testimonials about consumer electronics and
holidays are most popular
Copyright © 1994-2009 TOTE-M 13
% of respondents who stated that they had recently read testimonials about:
Te
stim
on
ials
Copyright © 1994-2009 TOTE-M 14
Testimonials: use, credibility, effect
More than 30% of all testimonial users make a buying
decision based on testimonials
Testimonials influence the higher educated almost twice as much
in their buying decision (44% vs 25%)
Interest driven testimonial visitors (browsers) have almost the
same sales conversion (e.g. 38%) as visitors who use
testimonials for purchase orientation (seekers) (44%)
Most popular sites: comparison sites, consumer organization
sites and online communities (telecom)
Lower educated people give more online testimonies than
higher educated (24% vs 20%), but are more sceptical about
the independence of testimonials. They think that most
testimonials are written by manufacturers (56% vs 40%).
Te
stim
on
ials
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
8Financial Services, Consumer Electronics and Telecom Operators
Financial Services
TOTE-M Consumer Research
Report on Loyalty, (Potential) Churn
and Testimonials 2009
Main drivers of customer loyalty are:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%First time right
Customer service
Positive experiences
Product features (e.g. the interest rate)
Company image
Company PR
Involvement with company
Brand experience
Company authority
Personal recommendations
Offer to new customers
Web testimonials
Copyright © 1994-2009 TOTE-M 16
90% of customers
were loyal to their
financial service
provider
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
9Financial Services, Consumer Electronics and Telecom Operators
6%
41%53%
PromotersPassivesDetractors
Customers do not recommend their
financial service providers: NPS = -47%
Copyright © 1994-2009 TOTE-M 17
Fin
an
cia
l Se
rvic
es
Researched
brands include:
Postbank
Rabobank
ING
ABN AMRO
RBS
SNS
Fortis
AEGON
DSB
Orientation
Purchase
Use
New needs
Problems
Main drivers of potential churn are:
0%
10%
20%
30%
40%
50%
60%
70%
Complaints
Product features (e.g. the interest rate)
Customer service
First time right
Company PR
Company image
Recommendations
Involvement with company
Brand experience
Welcome offer for new customers
Copyright © 1994-2009 TOTE-M 18
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
10Financial Services, Consumer Electronics and Telecom Operators
Potentially churning customers verify many
characteristics:
Copyright © 1994-2009 TOTE-M 19
80%
78%
76%
76%
76%
74%
73%
69%
62%
61%
58%
57%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Product features (e.g. the interest rate)
First time right
Customer service
Previous experiences with the company
Complaints
Personal recommendations
Company PR
Company image
Company authority
Brand experience
Involvement with the company
Welcome offer for new customers
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
Customers get
their information
from all sources,
but prefer the
internet. Each
source has it’s
own goals
The most frequently quoted sources of
information when potentially churning are
internet and personal recommendations
0%
5%
10%
15%
20%
25%
30%
35%
40%
Company authority
Company PR
Customer service
First time right
Product features
Price
Company image
Previous experiences with the company
Brand experience
Involvement with company
Other users' complaints
Offer to new customers
Television
Internet
Personal recommendations
In-Store - face to face
Copyright © 1994-2009 TOTE-M 20
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
11Financial Services, Consumer Electronics and Telecom Operators
Both usage and perceived reliability of online
communities are low
0%
20%
40%
60%
80%
100%
Consumer organization sites
Comparison sites
Company sites
Online communities
Use Reliability
Copyright © 1994-2009 TOTE-M 21
Consumer
organization sites
are deemed very
reliable but
comparison sites
and company
sites are used as
well
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
I use testimonials:
78%
75%
75%
72%
65%
63%
61%
60%
42%
40%
39%
34%
21%
5%
0% 20% 40% 60% 80%
to find information about product quality
to find the best product offer
before I purchase the product
to verify my preference
to find price information
to keep up to date
to get new ideas
to get more information about a purchased product
to get more information about after-sales service
when there are problems after product purchase
during product purchase
to base my product choice on
after product purchase
to get in touch with other users
Copyright © 1994-2009 TOTE-M 22
Fin
an
cia
l Se
rvic
es
Only 15% of testimonial
users read testimonials
about financial services
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
12Financial Services, Consumer Electronics and Telecom Operators
Main drivers of testimonial reliability are:
Copyright © 1994-2009 TOTE-M 23
85%
76%
71%
67%
59%
58%
56%
41%
34%
33%
31%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
actuality
Independency
positive vs. negative reviews
average review score
length and detail of testimonial
# of reviews
language spelling
site look and feel
how I got there
identification with author
know who the author is
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
Cost of change prevents switching between
financial services. Therefore churn ratio is
low (10%) and mostly related to savings accounts
Copyright © 1994-2009 TOTE-M 24
35%
9%
7%
6%
6%
6%
4%
4%
3%
0% 10% 20% 30% 40%
Interest rate
Other users'complaints
Involvement with the company
Service
Company PR
Welcome offer for new customers
Personal Recommendations
Brand experience
No choice
Churned
customers
are more
price sensitive than
loyal
customers
Fin
an
cia
l Se
rvic
es
Postbank (19%),
Rabobank (11%) and
ABN AMRO (10%)
have the highest churn rates
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
13Financial Services, Consumer Electronics and Telecom Operators
Customers that churned are deal-sensitive
Copyright © 1994-2009 TOTE-M 25
42%
28%
12%
19%
0% 10% 20% 30% 40% 50%
I switch whenever I can get a better offer for the same price
I switch only if conditions get really bad
I switch based on price only
None of the above applies to me
Spreading the
word:30% of churned
customers share
their experience
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
59%
16%
15%
14%
12%
12%
11%
10%
9%
9%
2%
0% 10%20%30%40%50%60%70%
Interest rate
Company image
Positive experiences
Personal recommendations
First time right
Brand experience
Company PR
Involvement with the company
Customer service
Welcome offer
Positive web testimonials
New customers were strongly attracted by the
interest rate (savings account)
Copyright © 1994-2009 TOTE-M 26
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
14Financial Services, Consumer Electronics and Telecom Operators
New customers mainly made their decision
based on:
Copyright © 1994-2009 TOTE-M 27
Fin
an
cia
l Se
rvic
es
56%
42%
42%
42%
42%
36%
36%
35%
34%
29%
28%
26%
0% 10% 20% 30% 40% 50% 60%
Product features (e.g. the interest rate)
Company PR
Company image
Customer service
First time right
Personal recommendations
Company authority
Brand experience
Previous experiences with the company
Welcome offer for new customers
Involvement with the company
Complaints of other users
Orientation
Purchase
Use
New needs
Problems
0%
5%
10%
15%
20%
25%
30%
35%
40%
Company authority
Company PR
Customer service
Reliability of service
Product features
Price
Company image
Previous experiences with the company
Brand experience
Involvement with company
Users' complaints
Welcome offer
Television
Internet
Personal
In-Store
The Internet is mostly
used for finding price
and product info
Internet was the channel most often
used to verify information to support the new
choice, especially on price and product features
Copyright © 1994-2009 TOTE-M 28
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
15Financial Services, Consumer Electronics and Telecom Operators
12%
59%
29%
PromotersPassivesDetractors
Recently switched customers are slightly
better promoters than loyal customers:
NPS = -17%
Copyright © 1994-2009 TOTE-M 29
Fin
an
cia
l Se
rvic
es
Orientation
Purchase
Use
New needs
Problems
Loyalty and churn have different drivers
Copyright © 1994-2009 TOTE-M 30
Churn drivers
Fin
an
cia
l Se
rvic
es
89%
88%
87%
75%
62%
59%
55%
52%
50%
47%
29%
24%
12%
15%
59%
16%
11%
10%
12%
9%
14%
9%
2%
-26%
-37%
-40%
-15%
-19%
-12%
-11%
-14%
-9%
-63%
-6%
-35%
-6%
-6%
-7%
-4%
-4%
-6%
-9%
-4%
First time right
Customer service
Positive experiences
Product features
Company image
Company PR
Involvement with company
Brand experience
Company authority
Personal recommendation
Welcome offer to new customers
Webtestimonials
Complaints
Forced switch
Potential churn drivers Loyalty drivers
New choice drivers
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
16Financial Services, Consumer Electronics and Telecom Operators
Consumer Electronics
TOTE-M Consumer Research
Report on Loyalty, (Potential) Churn
and Testimonials 2009
Main drivers of customer loyalty are:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%Customer service
Positive experiences
Price
First time right
Product features
Personal recommendations
Company imageCompany PR
Welcome offer to new consumers
Brand experience
Involvement with the company
Company authority
Web testimonials
Copyright © 1994-2009 TOTE-M 32
75% of customers
reported that they are
loyal to their consumer
electronics brands
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
17Financial Services, Consumer Electronics and Telecom Operators
4%
57%
39%
PromotersPassivesDetractors
Customers do not recommend their
consumer electronics brand: NPS = -35%
Copyright © 1994-2009 TOTE-M 33
Con
su
me
rE
lectr
on
ics
Researched
brands include:
Nokia
Philips
Samsung
Sony
JVC
LG
Siemens
Dell
Compaq
HP
Panasonic
Apple
Orientation
Purchase
Use
New needs
Problems
Main drivers of potential churn are:
0%
10%
20%
30%
40%
50%
60%Complaints
Product features
Customer service
First time right
Personal recommendations
Price
Company PR
Company image
Brand experience
Welcome offer to new consumers
Copyright © 1994-2009 TOTE-M 34
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
18Financial Services, Consumer Electronics and Telecom Operators
Potentially churning customers verify many
characteristics:
Copyright © 1994-2009 TOTE-M 35
84%
84%
81%
80%
79%
76%
74%
71%
65%
64%
59%
56%
55%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Product features
Price
Customer service
First time right
Other users' complaints
Personal recommendations
Previous experiences
Welcome offer for new customers
Company image
Company PR
Company authority
Brand experience
Involvement with the company
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
Customers considering churn
mainly base their decisions on online
information and the in-store service they receive
Copyright © 1994-2009 TOTE-M 36
0%
5%
10%
15%
20%
25%
30%
35%Company authority
Company PR
Customer service
Reliability of service
Product features
Price
Company image
Previous experiences with the company
Brand experience
Involvement with the company
Users' complaints
Welcome offer
Television
Internet
Personal recommandations
In-Store
Consumers use many
sources, mainly
internet,
recommendations and
in-store are very
important.
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
19Financial Services, Consumer Electronics and Telecom Operators
Comparison
sites are
widely used,
but consumer
sites are
perceived as
more reliable
0%
20%
40%
60%
80%
100%
Consumer organization sites
Comparison sites
Company sitesOnline communities
Video sites
Use Reliability (very reliable)
Both usage and perceived reliability of online
communities are low.
Comparison sites are most frequently used
Copyright © 1994-2009 TOTE-M 37
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
I use testimonials:
92%
90%
75%
74%
71%
68%
59%
54%
45%
44%
43%
43%
22%
7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
to find information about product quality
before I purchase the product
to find the best product offer
to find price information
to verify my preference
to get more information about a purchased product
to get new ideas
during product purchase
to base my product choice on
to keep up to date
to get more information about after-sales service
when there are problems after product purchase
after product purchase
to get in touch with other users
Copyright © 1994-2009 TOTE-M 38
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
20Financial Services, Consumer Electronics and Telecom Operators
Main drivers of testimonial reliability are:
Copyright © 1994-2009 TOTE-M 39
78%
75%
71%
66%
65%
61%
55%
33%
32%
31%
29%
0% 10% 20% 30% 40% 50% 60% 70% 80%
actuality
independence
# of reviews
positive vs. negative reviews
average review score
language / spelling
length and detail of testimonial
identification with author
look and feel of the site
how I got there
know who the author is
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
Complaints play
a far smaller
role in actual
churn than in
potential churn
Actual churn is mainly driven by obsolete
product features
Copyright © 1994-2009 TOTE-M 40
66%
14%
14%
9%
7%
4%
3%
3%
3%
3%
0% 20% 40% 60%
Product features
Price of last choice
Complaints
Personal recommendations
Customer service
Company image
Lack of involvement with the company
Welcome offer for new customers
Brand experience
Provided by employer
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
21Financial Services, Consumer Electronics and Telecom Operators
Customers that churned are deal-sensitive.
They want a better product for the same price.
Copyright © 1994-2009 TOTE-M 41
45%
21%
14%
20%
0% 10% 20% 30% 40% 50%
I switch whenever I can get a better offer for the same price
I switch only if conditions get really bad
My switching is based on price alone
None of the above applies to me
Spreading the
word:40% of churned
customers share
their experience
Young people share their
experiences with family and friends
during switches. Company image
also plays a important role in
switching.
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
New customers were mainly attracted by
product features and price
Copyright © 1994-2009 TOTE-M 42
Low-income consumers rely
more on friends and relatives
than do consumers with
a higher income
(27% vs. 6 %)
Con
su
me
rE
lectr
on
ics
56%
40%
21%
20%
19%
14%
12%
11%
8%
8%
0% 20% 40% 60%
Product features
Price
Personal recommendations
Welcome offer
Positive experiences
Company image
Web testimonials
Customer service
First time right
Brand experience
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
22Financial Services, Consumer Electronics and Telecom Operators
New customers mainly made their decision
based on:
Copyright © 1994-2009 TOTE-M 43
79%
78%
59%
52%
52%
51%
51%
48%
47%
40%
40%
36%
33%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Product features
Price
Personal recommendations
Previous experiences
Company image
First time right
Customer service
Brand experience
Welcome offer for new customers
Company PR
Company authority
Other users' complaints
Involvement with the company
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
Internet and In-store were the primary sources
of information for new customers
0%
5%
10%
15%
20%
25%
30%
35%
Company authority
Company PR
Customer service
Reliability of service
Product features
Price
Company image
Previous experiences with the company
Brand experience
Involvement with company
Users' complaints
Welcome offer
Television
Internet
Personal
In-StoreCopyright © 1994-2009 TOTE-M 44
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
23Financial Services, Consumer Electronics and Telecom Operators
17%
67%
16%
PromotersPassivesDetractors
Recently switched customers are better
promoters than loyal customers and have a
positive NPS: NPS = 1%
Copyright © 1994-2009 TOTE-M 45
Con
su
me
rE
lectr
on
ics
Orientation
Purchase
Use
New needs
Problems
Loyalty and churn have different drivers
Copyright © 1994-2009 TOTE-M 46
Con
su
me
rE
lectr
on
ics
88%
85%
88%
86%
83%
58%
47%
49%
43%
46%
36%
40%
31%
11%
8%
19%
40%
56%
21%
14%
8%
20%
12%
-43%
-23%
20%
-44%
-20%
-12%
-10%
-10%
-10%
-54%
-7%
-14%
-66%
-9%
-4%
-3%
-3%
-3%
-14%
-3%
Customer service
First time right
Positive experiences
Price
Product features
Personal recommendation
Company PR
Company image
Brand experience
Welcome offer
Company authority
Involvement with company
Web testimonials
Complaints
Forced switch
Churn drivers
Potential churn drivers Loyalty drivers
New choice drivers
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
24Financial Services, Consumer Electronics and Telecom Operators
Telecom Operators
TOTE-M Consumer Research
Report on Loyalty, (Potential) Churn
and Testimonials 2009
90% of
customers
stated that they
are loyal to their
telecom
operators
Main drivers of customer loyalty are:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Customer service
First time right
Positive experiences
Price
Product features
Personal recommendations
Company PRCompany image
Brand experience
Welcome offer for new customers
Company authority
Involvement with the company
Web testimonials
Copyright © 1994-2009 TOTE-M 48
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
25Financial Services, Consumer Electronics and Telecom Operators
5%
61%
34%
PromotersPassivesDetractors
Customers do not recommend their
telecom operators: NPS = -29%
Copyright © 1994-2009 TOTE-M 49
Researched
brands include:
KPN
T-Mobile
TELE2
Ziggo
Vodafone
Pretium
XS4ALL
Planet
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
Main drivers of potential churn are:
Copyright © 1994-2009 TOTE-M 50
Complaint
handling is
critical to avoid
churn
0%
10%
20%
30%
40%
50%
60%Complaints
Price
Customer service
Reliability of service
Outdated productfeatures
Personal recommendations
Company PR
Annoyed by welcome offer for new customers
Company image
Changing employer
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
26Financial Services, Consumer Electronics and Telecom Operators
Potentially churning customers verify many
characteristics:
Copyright © 1994-2009 TOTE-M 51
79%
78%
78%
77%
74%
70%
64%
61%
60%
56%
52%
44%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Price
Customer service
Product features
Reliability of service
Users' complaints
Previous experiences with the company
Company PR
Company image
Welcome offer
Company authority
Brand experience
Involvement with the company
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
Company authority
Company PR
Customer service
Reliability of service
Product features
Price
Company image
Previous experiences
Brand experience
Involvement with the company
Users' complaints
Welcome offer
Television
Internet
Personal
In-Store
Main sources of information for potential
churners are internet and personal
recommendations
Copyright © 1994-2009 TOTE-M 52
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
27Financial Services, Consumer Electronics and Telecom Operators
Comparison sites are preferred although
consumer organization sites are perceived
as more reliable
0%
20%
40%
60%
80%
100%
Consumer organization
sites
Comparison sites
Company sites
Online communities
Video sites
Use Reliability (very reliable)
Copyright © 1994-2009 TOTE-M 53
The usage of online communities and
consumer organization sites
is lagging behind their deemed
reliability
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
I use testimonials:
82%
79%
76%
73%
69%
69%
62%
56%
53%
52%
44%
31%
29%
11%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
to find information about product quality
before I purchase a product
to verify my preference
to find the best offer
to find price information
to get more information about a purchased service
to get new ideas
to keep up to date
whenever there are problems after product purchase
during product purchase
to get more information about after sales service
to base my product choice on
after product purchase
to get in touch with other users
Copyright © 1994-2009 TOTE-M 54
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
28Financial Services, Consumer Electronics and Telecom Operators
Main drivers of testimonial reliability are:
Copyright © 1994-2009 TOTE-M 55
71%
71%
67%
66%
63%
60%
52%
50%
40%
30%
23%
0% 10% 20% 30% 40% 50% 60% 70% 80%
actuality
independence
average review score
# of reviews
positive vs. negative reviews
language / spelling
length and detail of testimonial
identification with author
how I got there
site look and feel
know who the author is
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
Actual churn is mainly driven by price,
complaints and product features:
Copyright © 1994-2009 TOTE-M 56
39%
22%
20%
10%
10%
9%
8%
6%
5%
0% 10% 20% 30% 40%
Price of former provider
Complaints
Outdated product features
Forced change (e.g. move)
Friends Recommendations
involvement with company
Customer service
Company image
Annoyed by welcome offer
Churned
customers are
more price sensitive than
loyal customers
Loyal young people are more
influenced by friends than by
older people when leaving their
providers (30% vs 9 %)
42% of churn
is related to
KPN
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
29Financial Services, Consumer Electronics and Telecom Operators
More than
50% of the
churned
customers
share their
experience
41%
29%
20%
10%
0% 10% 20% 30% 40% 50%
I switch whenever I can get a better offer for the same price
I switch only if conditions get really bad
My switching is based on price alone
None of the above apply to me
Customers that churned are deal-sensitive
Copyright © 1994-2009 TOTE-M 57
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
59%
16%
15%
14%
12%
12%
11%
10%
9%
9%
0% 10% 20% 30% 40% 50% 60% 70%
Price
Product features
Welcome offer
Positive experiences
Personal recommandation
Reliability of service
Company image
Customer service
Company authority
Company PR
New customers were attracted by
price
Copyright © 1994-2009 TOTE-M 58
> 50% of the new
customers were
attracted by price
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
30Financial Services, Consumer Electronics and Telecom Operators
New customers mainly made their decision
based on:
Copyright © 1994-2009 TOTE-M 59
30%
28%
21%
21%
20%
20%
19%
18%
17%
14%
13%
13%
12%
0% 5% 10% 15% 20% 25% 30% 35%
Price
Product features
Customer service
Recommendation
Reliability of service
Welcome offer
Previous experience with the company
Company image
Company PR
Company authority
User complaints
Brand experience
Involvement with the company
Low-income consumers make a
decision based on previous
experiences more often
than high-income
consumers
( 29% vs 7%)
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
New customers mainly used internet as a
source of information
Copyright © 1994-2009 TOTE-M 60
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Company authority
Company PR
Customer service
Reliability of service
Product features
Price
Company image
Previous experiences with the company
Brand experience
Involvement with company
Users' complaints
Welcome offer
Television
Internet
Personal
In-Store
New customers
preferred to consult
online information
during their
decision-making
Orientation
Purchase
Use
New needs
Problems
Te
leco
m O
pe
rato
rs
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
31Financial Services, Consumer Electronics and Telecom Operators
6%
62%
32%
PromotersPassivesDetractors
Recently switched customers are not very
enthusiastic about their new providers:
NPS = -26%
Copyright © 1994-2009 TOTE-M 61
Te
leco
m O
pe
rato
rs
Orientation
Purchase
Use
New needs
Problems
Loyalty and churn have different drivers
Copyright © 1994-2009 TOTE-M 62
90%
89%
87%
83%
76%
51%
46%
42%
39%
37%
36%
33%
28%
10%
13%
18%
56%
28%
16%
6%
12%
21%
8%
-31%
-30%
-33%
-22%
-12%
-10%
7%
-10%
-53%
-7%
-8%
-39%
-20%
-10%
-6%
-5%
-9%
-22%
-4%
-10%
Customer service
First time right
Positive experiences
Price
Product features
Personal recommendation
Company PR
Company image
Brand experience
Welcome offer
Company authority
Involvement with company
Webtestimonials
Complaints
Work related
Forced switch
Te
leco
m O
pe
rato
rs
Churn drivers
Potential churn drivers Loyalty drivers
New choice drivers
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
32Financial Services, Consumer Electronics and Telecom Operators
Conclusions &
Recommendations
TOTE-M Consumer Research
Report on Loyalty, (Potential) Churn
and Testimonials 2009
Conclusions – Testimonials
25% of users repurchased, based on testimonials
Higher educated are more influenced by testimonials
Testimonials are mostly used for consumer electronics,
holidays and books & music
Copyright © 1994-2009 TOTE-M 64
Con
clu
sio
ns
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
33Financial Services, Consumer Electronics and Telecom Operators
Conclusions – Financial Services
More than 50% of customers are detractor of their bank
Insufficient customer management is the main reason to
leave a bank
NPS is not directly related to churn rate. Cost of change
prevents dissatisfied customers to leave
Interest is an important criterion to choose
Customer management will become more important in
the future, e.g. when account numbers can be
transferred to a new bank
Copyright © 1994-2009 TOTE-M 65
Con
clu
sio
ns
Conclusions – Consumer Electronics
Customers are quite loyal to their brands in spite of a
high level of detractors
Manufacturers have to keep their products up-to-date
Loyalty is defined by the product and customer service
Consumers have a multichannel approach for verification
when choosing or leaving a brand
Copyright © 1994-2009 TOTE-M 66
Con
clu
sio
ns
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
34Financial Services, Consumer Electronics and Telecom Operators
Conclusions – Telecom Operators
Customers are loyal, in spite of a high level of detractors
Cost of change prevents customers to leave
Switched customers are not more satisfied than loyal
customers
Customer management is the most important driver for
customer loyalty
New choices are strongly related to price and product
offering (e.g. phones)
Copyright © 1994-2009 TOTE-M 67
Con
clu
sio
ns
Recommendations
Personal Active interactions on social media show your customers that you care about
their voice
Take your customers’ social group into account when defining your socialmedia strategy
Provide your customers with a personal, tailored service offering
Memorable Use testimonials to see what moves your brand and to tune your promise,
products and services
Surprise your customer by delivering service above expectation over all touch points
Enduring Tailor your social media strategy to each consumer life cycle stage
Focus on customer experience to create loyal customers
Flawless business processes reduce your operating cost level and have anenduring positive impact on your customer value
Maintain a competitive pricing and product/service offering to avoid churn
Invest in your existing customers
Copyright © 1994-2009 TOTE-M 68
Reco
mm
en
da
tio
ns
TOTE-M Consumer Research Report on Loyalty, (Potential) Churn and Testimonials 2009
June 2009© TOTE-M 1994-2009
35Financial Services, Consumer Electronics and Telecom Operators
Copyright © 1994-2009 TOTE-M 69
TOTE-M
Van Diemenstraat 314
1013 CR Amsterdam
The Netherlands
T +31(0)20 420 77 80
F +31(0)20 420 26 81
E nl.info@tote-m.com
www.tote-m.com
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