TORONTO – While all telecom and cable companies like to talk about are various multimedia bundles and how they increase “stickiness” among their customers, a new telecom study by KPMG says that a low price is actually the most important consideration for users.
The global survey found that a significant number of consumers say they would readily break their contract and switch to another provider if they were offered a better price for one or more of the services.
The study, Consumers & Convergence II: The Search for Value, Choice and Convenience in the Digital Age, found that the notion of bundled services driving customer loyalty through all-in-one convenience and unified billing is not as strong as the industry believes. The data reveals that what consumers think of as convenience and ease of use may differ from what their service providers think.
“Canadian consumers, who spend a significant part of their day on multimedia devices, tend to be more price sensitive than loyal when it comes to bundled services,” said Kathy Cunningham, industry sector leader, communications and media practice, KPMG LLP. “The providers’ assumption that bundling packages that offer the triple- or quadruple-play of services will be a strong retention factor is not as binding with consumers as a competitive price point.”
Of the 4,400 consumers surveyed by KPMG in 16 countries in North and South America, Asia, and Europe, 57% indicated attractive pricing is the most important driver in the decision for signing a bundled service contract.
Of the 200 Canadians surveyed, 75% indicated that pricing was a key factor when signing a bundled service contract. Only 7.5% acknowledged convenience of single billing as the most important factor.
Moreover, adds the release, 58% of Canadian survey respondents indicated that even if only one of the bundled elements they subscribe to was offered at a more competitive price point by another carrier, they would readily break their contract and switch to another carrier. Twenty percent of respondents indicated that their current service package was ‘sticky’ and they would not consider switching.
The only product category where consumers showed loyalty was games. Not only would less than half of Canadian gamers switch because of price, but 40% would not even alter their usage – indicating that a successful game is thus a relatively ‘sticky’ product for consumers.
Other categories, including instant messaging, multimedia, blogging/networking, news access, and shopping, do not have the same retention factor with consumers.
The study also showed consumers globally are generally unwilling to pay a premium for additional multimedia services on their mobile phones, too. Over 84% of Canadians also said they would switch to a cheaper or free multimedia site if their current content provider introduced or raised fees.
Consumers also have preferred devices for specific activities, but generally the mobile handset is emerging as a central point in user experience because of its ease of use and ability to help the consumer navigate through multiple media experiences, found the survey. Mobility increasingly means that users expect to be able to be online all the time and that their online experience be personalized to their needs.
Canadian consumers use their mobile handsets as a primary device for voice calls (79%) and secondarily for SMS (short message servicing) messaging (46%), while other on-line activities, such as instant messaging (8%) and social networking/blogging/video sharing (4%) saw the desktop/laptop computer as the primary device.
As well, computers and consumer durables, such as MP3 players, are overwhelmingly the devices of choice for multimedia applications, which include music and video clips, with 62% using their desktop or laptop computer to access multimedia applications and 37% using their consumer durables, compared with two percent using a mobile phone for these applications.
