Customer Power is a programme of research from Harris Interactive UK, exploring the relationships that customers want to have with their service providers. Harris Interactive recently looked at the mobile, financial services and energy sectors in the UK and here we are put the pay TV sector under the spotlight featuring feedback and comments from Sky, BT TV and Virgin Media customers. First released July 2014.
TRANSCRIPT
Exploring the relationships that customers want to have with their pay TV provider
July 2014
1
Presenter
Presentation Notes
SLIDE 1 LEE Hello and thanks for joining us today. Customer Power is a programme of research exploring the relationships that customers want to have with their service providers. We have previously looked at the mobile, financial services and energy sectors and today we are putting the pay TV sector under the spotlight featuring feedback and comments from Sky, BT TV and Virgin Media customers. My name is Lee Langford. I’m a Director at Harris Interactive specialising in technology and media research and I’m here with Debbie Senior, our Stakeholder Relationship Consultant, who will provide some thoughts on how pay TV providers can connect more effectively with their customers. The webcast today will be short and sweet - about 12 minutes. We have lots more data from this self-funded research, so if you would like to hear more, please get in touch - our contact details will appear on screen at the end of the webcast. GO TO SLIDE 2
2
Presenter
Presentation Notes
LEE We decided to focus on pay TV this time because this is a really interesting and dynamic sector right now. Sky has recently signed a 5-year content deal with Virgin Media. BT has credited the launch of BT Sport as the catalyst for its consumer division’s first annual revenue growth in more than a decade. While the big guns slug it out over sports content, TalkTalk has emerged as the fastest growing pay TV operator – faster than its three main competitors combined in the most recent figures. And last but not least Virgin Media is currently very visible running a new campaign to support its Big Kahuna quad-play offer. GO TO SLIDE 3
Intentional Emotional
Likelihood to continue using
Preferred provider
Gives something different
Rational Value you as a customer
Relationship based on trust
Satisfaction
Likelihood to recommend
3
Relationship Components
Presenter
Presentation Notes
DEBBIE At Harris we‘ve developed a composite Relationship Score that is used by many of our clients. For those of you familiar with NPS, advocacy is one component of our score. But we know the importance of connecting with customers’ hearts and minds so we link metrics of trust and whether customers feel valued together with the more traditional measures of satisfaction and recommendation. We then connect these with future intentions towards a provider – willingness to continue using them for example, and whether a provider enjoys preferred status or is offering something different. Achieving uniqueness is often tough but is a clear sign of business success as it indicates the sustainability of the relationship. As we will see later, content is one way in which pay TV providers can offer differentiation but this could also come in the form of service bundling or the way in which customer service is delivered. GO TO SLIDE 4
Intentional Emotional
Rational
4
Emotionally & Rationally Connected
Emotionally Connected
Rationally Connected
Relationship Score
Fully connected
Indifferent Disconnected
Presenter
Presentation Notes
DEBBIE From these seven metrics we create a Relationship Score for each customer that defines how connected they are to their provider. There are six groups ranging from fully connected to indifferent and disconnected. During this webcast we‘ll identify what the pay TV market looks like right now and why its important for providers to do more to build stronger relationships with their customers. GO TO SLIDE 5
Only 18% are fully connected
with their pay TV provider ...
5
... 47% are either disconnected or
indifferent
Weak connections
Presenter
Presentation Notes
LEE The first really striking findings from our research are that less than one in five pay TV customers are fully connected with their current provider and almost half are either disconnected from or indifferent to their provider. In anyone’s language, this is not good news for pay TV providers. But what do these statistics mean in more concrete terms? GO TO SLIDE 6
fully connected
88% will definitely continue using
67% would definitely recommend
72% have a bundled service package
29% recently upgraded their package
6
disconnected / indifferent
2% will definitely continue using
0% would definitely recommend
65% have a bundled service package
18% recently upgraded their package
Weak connections
Presenter
Presentation Notes
LEE Well firstly, customers that are fully connected with their pay TV provider will stick with them in the long-term and promote them to friends and family. Fully connected customers are also more likely to upgrade their TV package and take other services from their provider in a bundle. Disconnected or indifferent customers are the polar opposite in terms of likely retention and brand promotion and they are also less likely to generate higher ARPU in the ways I just described. GO TO SLIDE 7
22 19 18
13 9 10
12 17 14
10 7 14
33 41 36
10 9 9
Fully Connected
Rationally Connected
Emotionally Connected
Indifferent
Disconnected
7
Emotionally & Rationally Connected
BT more strongly connected
Presenter
Presentation Notes
LEE So how do the three main pay TV providers shape up on our Relationship Score? Well the basic pattern of disconnection applies to all three, but BT TV enjoys a strong connection with more customers than Sky or Virgin Media. GO TO SLIDE 8
Not feeling valued
8
Presenter
Presentation Notes
LEE Less than half of all pay TV customers feel valued by their provider. And the survey provides a number of clues as to why customers feel this way. GO TO SLIDE 9
Bugbear
9
Presenter
Presentation Notes
LEE The major bugbear, raised time and again by customers, is highlighted here in current communications examples from the three main providers. I’m talking, of course, about the perception that new customers receive preferential deals over existing customers. GO TO SLIDE 10
10
75% do not feel rewarded...
... and believe that new
customers get better deals
Presenter
Presentation Notes
LEE� In fact, 75% of pay TV customers believe new customers are more highly valued. And clearly there is a lot of resentment about this. One customer said:“New customers get better deals and unless loyal customers threaten to go elsewhere, they never have their costs reduced.” GO TO SLIDE 11
11
I do believe that you benefit from having your services bundled together. It helps to negotiate deals with them - if you call them and ask them to go through your bill with you they are more than willing to try and save you a few pounds.
“ “
Savvy consumers
Presenter
Presentation Notes
LEE The comment here on the left is very interesting and highlights the fact that consumers are becoming increasingly savvy about their opportunities to negotiate with their service providers. And nowadays of course there is plenty of advice available to anyone thinking of doing this. But here’s a question for you. What proportion of pay TV customers do you think have tried to negotiate their fees with their provider? 10%? 20%? 30% maybe? And how many of these were successful do you think? GO TO SLIDE 12
12
41% of pay TV customers have tried to negotiate their monthly
fees with their provider
Two-fifths have tried
Presenter
Presentation Notes
LEE In fact, just over two-fifths of customers have tried to negotiate a deal with their pay TV provider. GO TO SLIDE 13
11% 30%
Had their fees reduced
Turned down
13
41% of pay TV customers have tried to negotiate their monthly
fees with their provider
Mainly a positive outcome
Presenter
Presentation Notes
LEE And three-quarters of those who have tried to haggle have been successful. For any pay TV providers listening in, apologies but we WILL be revealing these statistics to the wider public at some point! GO TO SLIDE 14
14
Lots of switching, right?
Presenter
Presentation Notes
DEBBIE So, all of the evidence so far points to a market where customers switch around quite a bit ... Many are disconnected from their provider, many feel that their loyalty is not rewarded, and some are being refused better deals when they try to haggle. GO TO SLIDE 15
Wrong!
15
Presenter
Presentation Notes
DEBBIE But actually, this is an extremely static sector with very few customers switching providers. GO TO SLIDE 16
41% of pay TV customers have tried to negotiate their monthly
fees with their provider
11%
Turned down
16
Presenter
Presentation Notes
DEBBIE Firstly, lets look at what happened to the 11% who told us they had been unsuccessful when they tried to haggle with their pay TV provider. Can we assume that a majority of these moved elsewhere? GO TO SLIDE 17
41% of pay TV customers have tried to negotiate their monthly
fees with their provider
11%
9% did not switch provider
Turned down
17
Presenter
Presentation Notes
DEBBIE In fact, the vast majority stayed put. But perhaps these are just savvy consumers simply looking to save some money but with no real intention of moving. So let’s look at the bigger picture ... GO TO SLIDE 18
64% of pay TV customers have never switched
their provider
compared with 32% of mobile network operator customers
18
Presenter
Presentation Notes
DEBBIE And when we do, we discover that two-thirds of pay TV customers have NEVER strayed from their original provider. As a point of reference, if we compare this with the mobile phone sector, 64% is exactly twice as high as the equivalent percentage of mobile phone users who have always stayed with the same provider. GO TO SLIDE 19
64% of pay TV customers have never switched
their provider
76% of pay TV customers are unlikely to switch
provider in the next year 19
compared with 32% of mobile network operator customers
Presenter
Presentation Notes
DEBBIE With such high historic customer loyalty, it isn’t too surprising that the vast majority of pay TV customers say they are unlikely to switch provider in the next 12 months. So, what is it that is creating such high levels of customer loyalty in the pay TV sector? Is customer service exceptional? Are pay TV customers too apathetic to switch? Or are there other barriers in place? GO TO SLIDE 20
20
Push or pull factors
Presenter
Presentation Notes
LEE We speculated that a range of different factors might come into play when customers decide to stick with a pay TV provider or move on to another. GO TO SLIDE 21
21
Push or pull factors
Presenter
Presentation Notes
LEE Our list included things like better deals, complicated switching processes, poor or exceptional customer service, service bundling and not forgetting content of course. GO TO SLIDES 22, 23, 24 AND 25 FAIRLY QUICKLY AT POINT AT WHICH THEY ARE MENTIONED THEN GO TO SLIDE 26
22
Push or pull factors
23
Push or pull factors
24
Push or pull factors
25
Push or pull factors
34
33
31
21
24
23
47
34
27
28
21
14
38
40
29
22
24
16
Poor value for money
Better offer elsewhere
Poor customer service
Didn't feel valued
Service not meeting needs
Poor staff attitude
46
22
15
13
17
15
16
23
31
18
15
16
32
23
26
13
13
15
Would lose content
Too much time and effort
Bundle makes it difficult
More expensive to switch
Switching too complicated
No point - they are all the same
REASONS FOR LEAVING
26
BARRIERS TO SWITCHING
Presenter
Presentation Notes
LEE Looking first of all at reasons for leaving a provider, here on the left hand side of the chart, it’s clear that although poor customer service, staff attitude and not feeling valued play a part, switching is most likely to be driven by the belief that a better offer or better value for money is available elsewhere. But for those who have not switched, many of whom are not strongly connected to their provider remember, content is king with 39% overall citing ‘loss of content’ as the main barrier preventing them from taking their custom elsewhere. Content particularly stands out for Sky customers. The next most common reason is basic apathy – the belief that it would take too much time and effort to switch. And the advent and growth of bundled services heightens this perception of complexity for many and for BT TV customers in particular. GO TO SLIDE 27
My TV provider has really poor customer service but I can’t get the same programmes from another company so I stay with them. If someone else could show me they have better programmes, I would probably switch.
“ 27
“ Content is king
Presenter
Presentation Notes
LEE Summing up what we see here in terms of the push and pull, it is clearly content that wins out over service for the majority of pay TV customers. An example comment here makes this point very neatly. GO TO SLIDE 28
Loss of content
28
Presenter
Presentation Notes
DEBBIE We decided to go back to those who talked about loss of content being the main barrier to switching and we asked them which programmes, channels or sports would make them seriously consider switching to another provider if it were to gain exclusive rights to show it. GO TO SLIDE 29
DEBBIE Sky Sports is the most common response overall – and this is the number one mention for Virgin Media customers as well as being number three for Sky customers. BT Sport is the most common response among BT TV customers. GO TO SLIDE 30
DEBBIE Many sports feature prominently. Football is essential and this appears to validate BT’s strategy to challenge Sky’s historical dominance of English Premier League and UEFA Champions League football. But customers, particularly males, also want cricket, formula 1, both rugby codes, tennis and golf. GO TO SLIDE 31
DEBBIE Sky Atlantic which offers exclusive HBO content like Game of Thrones is a major barrier working in Sky’s favour when it comes to retaining women in particular. This data suggests that Sky should continue to premium price this content in its negotiations with Virgin Media. GO TO SLIDE 32
Bundling
32
Presenter
Presentation Notes
DEBBIE And finally, let’s have a look at service bundling. Obviously this is a very positive thing from a provider perspective, helping to lock customers into long-term deals and generating higher ARPU, but how does this feel from a customer perspective? GO TO SLIDE 33
33
69% 67%
9%
Bundling
28%
Presenter
Presentation Notes
DEBBIE The majority of those we surveyed, nearly three-quarters, have some form of service bundle and this is most likely to involve broadband or landline alongside pay TV. Just 9% have a mobile service, mainly from either from Virgin Media or TalkTalk. GO TO SLIDE 34
50%
38%
Feel valued by pay TV provider
Bundled service package
Pay TV only package
34
Bundling = value
Presenter
Presentation Notes
DEBBIE And does bundling make a difference? Well, interestingly it really does and those who take a bundled service offer from their pay TV provider are much more likely to feel valued as customers than those who only take pay TV. Through this increased emotional connectivity, bundled service customers feel their provider listens to them more, better understands their needs, and communicates with them in a more relevant way. GO TO SLIDE 35
35
Summing up
Reward our loyalty
Bundling locks us in
Content is king
Switching is a hassle
Presenter
Presentation Notes
LEE OK, it’s time to wrap up and summarise what we have heard today about the pay TV sector. Overall, this is a market where customers do not feel particularly connected to their providers yet typically they stick with them despite feeling under-valued. Bundled deals appear to work from a provider and a customer perspective but the real key to overall market stability is the knowledge that valued content might be lost through switching providers. But don’t just take our word for it. To round things off, let’s hear from a few pay TV customers about their experiences. Thanks for your time today, and do get in touch if you would like to hear more on this topic. SHOW 3 VIDEOS = KATIE, IAN (BT) AND PETE THEN GO TO SLIDE 36
