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2011 Telco Innovation Study South Africa This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from InnovationAgency. This material was produced by InnovationAgency based on client interaction; it is not a complete record of the discussion.

2011 Telco Innovation Study

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This study investigates a number of aspects surrounding the level of innovation being achieved by organisations, as perceived from a localised end-user perspective. The study also looks at the level of customer satisfaction with their telecommunications provider (Telco); and what would entice a customer to switch from one Telco to another. The market research conducted highlights which Telcos are perceived to be the most innovative in the industry. Further analysis delves into why this is so.

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Page 1: 2011 Telco Innovation Study

2011 Telco Innovation Study

South Africa

This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for

distribution outside the client organization without prior written approval from InnovationAgency. This material was

produced by InnovationAgency based on client interaction; it is not a complete record of the discussion.

Page 2: 2011 Telco Innovation Study

About the Innovation Study

2011 Innovation Study Results

Page 3: 2011 Telco Innovation Study

About the Innovation StudyPurpose of the Innovation Study

Research methodology

Respondent demographics

Innovation Study questionnaire

Page 4: 2011 Telco Innovation Study

Page 4

Purpose of the Innovation Study

In the highly competitive market that organisations in South Africa find themselves, ameans of differentiation is of paramount importance. Innovation is seen as one of theprimary drivers in achieving this differentiation.

This study investigates a number of aspects surrounding the level of innovation beingachieved by organisations, as perceived from a localised end-user perspective. Thestudy also looks at the level of customer satisfaction with their telecommunicationsprovider (Telco); and what would entice a customer to switch from one Telco toanother. The market research conducted highlights which Telcos are perceived to bethe most innovative in the industry. Further analysis delves into why this is so.

The study also serves to create a greater awareness around the concern that Telcosneed to be responsive to customers’ emotional needs. The core purpose underpinningthis initiative is a strategy for managing the information acquired and turning it intoinsights that empower customers in new ways.

Page 5: 2011 Telco Innovation Study

Page 5

Research methodology

This report provides insight on the study conducted during 2010. This is anadministered survey conducted during various programs and workshops offered byInnovationAgency.

The survey was administered in a controlled manner. Survey questions were designedto be opened-ended in nature, and served to gauge individual perceptions around thelevel of innovation achieved by institutions from an end-user perspective.Respondents were not given information and/ or definitions of the survey questions.

Data collected was grouped and analysed and keywords created as a means tographically represent the results of study. The 2011 Innovation Study consisted of638 respondees.

Page 6: 2011 Telco Innovation Study

Page 6

Innovation Study questionnaire

The study questionnaire consisted of the following questions:

•Which Telco is the most innovative?

•Why did you rate the Telco as the most innovative?

•What lessons can be learnt from innovative Telcos?

•Have you switched Telco in the last 12 – 18 months?

•Why did you switch Telcos?

•Why have you not switched Telcos?

Page 7: 2011 Telco Innovation Study

Key thoughts

Page 7

Respondent demographics

• Study respondents represented a widespread of individuals, from various backgrounds

Female44%

Male56%

Gender split

African19%

Asian15%

Coloured

9%

White57%

Ethnic classification

0%

5%

10%

15%

20%

25%

30%

20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59

Age distribution

0%

5%

10%

15%

20%

25%

Income distribution

Page 8: 2011 Telco Innovation Study

2011 Innovation Study resultsMost innovative Telco

Reason for rating the Telco innovative

Lessons from innovative Telcos

Switched Telco in the last 12 – 18 months

Reason for switching Telco

Reason for not switching Telco

Page 9: 2011 Telco Innovation Study

Key thoughts

Page 9

Most innovative Telco

• Newcomers into the space will probably find it difficult gaining market share, in a market dominated by the Vodacom, MTN and Cell C

• Vodacom is perceived to be the clear leader in innovation, and MTN is the distant second

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Telkom

Virgin Mobile

Neotel

None of them

Cell C

MTN

Vodacom

Page 10: 2011 Telco Innovation Study

Key thoughts

Page 10

Reason for rating the Telco innovative

• Marketing and brand positioning is also a clear indicator when customers consider how innovative a Telco is

• “Products” are at the top of the list for rating a Telco innovative, ahead of “customer service” and “technology”

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Partnerships established

Wide appeal

Tarrifs

Open to new ideas

Continuously improving/ changing

Perception

Market leaders

Adapt to changes

Innovative culture

Technology

First to market

Network

Client solutions

Customer service

Company growth

Marketing

Products

Page 11: 2011 Telco Innovation Study

Key thoughts

Page 11

Lessons from innovative Telcos

• The prominence of customer centricity in the study implies that customers are looking for products and services to suit their specific needs

• Customers are also seeking greater innovation from their Telco’s. This may be signaling greater differentiation by customers, from their Telco’s

• The top lesson that respondents gave suggests that company brand positioning and how well they are known clearly influences customer perception

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Tarrifs

Forward looking

Synergistic partnerships

Business model

Time to market

Competitiveness

Technology

Continuously improve

Products

Challenge the status quo

Encourage innovation

Take risks

Adapt to changes

Customer service

Company growth

Individualised solutions

Marketing

Page 12: 2011 Telco Innovation Study

Key thoughts

Page 12

Switched Telco in the last 12 – 18 months

• The introduction of number portability does not seem to have added to the number of customers switching Telco, suggesting that there may be more reasons for customers not switching

• Less than one sixth of the respondents had switched Telco, despite the introduction of number portability

Yes9%

No91%

Page 13: 2011 Telco Innovation Study

Key thoughts

Page 13

Reason for switching Telco

• Results indicate that there may be more than one reason that drives customers to switch

• Customers don’t seem to be deterred by cost implications for the service they want

• Service levels were a significant factor for most of the respondents in their decision making process

0% 5% 10% 15% 20% 25% 30% 35%

Telco was not innovative

Network

Cost factors

Controlled by employer

Products

Service levels

Page 14: 2011 Telco Innovation Study

Key thoughts

Page 14

Reason for not switching Telco

• Despite the availability of number portability, customers indicate that they are finding switching too cumbersome a process

• Results also indicate that customers find it hard to differentiate the offerings from each Telco

• The results also suggest that customers chose to stay with one provider for more than one reason, but service levels were the most important

0% 5% 10% 15% 20% 25% 30%

Cost factors

Tried but couldn't

Used to current Telco

No time to

Intend on switching

Don't want to loose number

Locked in contract

Loyal

Products

Controlled by employer

No reason to

Service levels

All the same

Too much effort

Satisfied with Telco

Page 15: 2011 Telco Innovation Study

About UsWe live in a socially aware society whereinvolvement across a collective workforcecommunity is used to drive innovation. SocialBased Innovation approaches pave the way toa more networked and integrated means ofmanaging innovation. We are driving thisevolution forward.

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