Uncovering Real Mobile Data Usage and the Drivers of Customer Satisfaction

Uncovering Real Mobile Data Usage and the Drivers of Customer Satisfaction

          
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Uncovering Real Mobile Data Usage and the Drivers of Customer Satisfaction

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  • No crystal ball is needed to know that mobile data traffic—already burgeoning—is set to explode. Smartphones, streaming video, and connected devices (even vehicles) aren’t just whetting consumers’ appetite for data. They are stimulating a voracious hunger. Expert corroboration is in ample supply: the networking giant Cisco, for example, estimates that mobile data traffic will increase at a compound annual growth rate of 52% from 2014 through 2019.

    For the companies that are building the connected world, the big concern—and increasingly, the big challenge—is what to do about this coming demand. How can networks and applications be optimized to provide not only a smooth and seamless experience but also the experience that customers want most? And how can this be done without incurring huge costs for either customer or provider?

    Telecom operators, in particular, will need to face this challenge, as well as a hard truth about their traditional approach to network optimization. One-size-fits-all upgrades rolled out on a national scale simply won’t be sustainable. To meet even the most conservative growth projections, telcos will need costly new infrastructure (resulting in higher prices for customers) or resources, such as additional spectrum, that are hard to obtain. In many cases, they’ll need both.

    This dilemma has been on the horizon for a while now, and ideas for addressing it have been floated before. (See “How Telecoms Can Manage the Mobile Data Explosion,” BCG article, May 2012.) But with technological improvements, such as LTE, that can squeeze greater efficiencies out of existing infrastructure, most telcos haven’t had to worry about it. The coming demand, however, will outpace these relatively low-cost efficiency boosts.

    If telcos don’t discover more efficient, more effective ways to optimize their networks, they’ll be in jeopardy of losing customers and profits. App developers, content providers, and hardware manufacturers will be at risk, too, if the experience and the appeal of the connected world should diminish.

    Yet if the problem affects everyone, so, too, can the solution. By leveraging a deep understanding of how customers actually use networks and what drives their satisfaction, telcos and other stakeholders can focus their optimization efforts and their investments where they have the most impact: on both the customer experience and their own bottom line.

    There’s just one hitch. Most companies lack that deep understanding.

    Although it is clear that different customers use networks in different ways, the specifics are largely unknown. Telcos, for example, typically don’t have a detailed picture of how usage patterns differ among customer segments. Nor do they know for certain what drives customer satisfaction. Most telcos work under the assumption that the key to keeping customers happy is to continually ratchet up speed. It’s a notion that makes sense, considering the growing popularity of video and other data-intensive apps. But is it really the case—particularly for smaller mobile devices such as smartphones, whose users generally aren’t streaming super-high-resolution content such as 4K video?

    Working with key stakeholders around the world, The Boston Consulting Group has unveiled some important—and even surprising—insights about usage, satisfaction, and long-held assumptions. A project with a telco in Eastern Europe, for example, revealed that reliable voice performance, a seemingly old-school factor, still plays a key role in customer satisfaction and churn. Another project, in Western Europe, showed that mobile-network users consider good service more important in certain locations—for example, train stations—than in others.

    Such findings have helped these telcos substantially redirect their network investments to achieve better returns. In a more recent study that captured detailed usage information from 1,500 volunteers as they—and their smartphones—went about their lives, we were able not only to see how usage differs across segments but also to quantify the differences. And by polling participants about their experiences—not, like traditional surveys, long after the fact but almost immediately afterwards—we were able to gain a better understanding of what really influences satisfaction. (See “Unveiling the Truth Behind Usage and Satisfaction.”)

    UNVEILING THE TRUTH BEHIND USAGE AND SATISFACTION

    What can companies do to gain a better understanding of how their customers use data and what factors are important to them? Our approach was to go directly to the source: the customers themselves.

    With a proprietary app installed on study participants’ phones, we were able to capture a wealth of detail, including which apps participants were using, when and over what type of network they used them, and how much latency and throughput they were experiencing. Meanwhile, by conducting in-the-moment surveys that popped up on participants’ screens almost immediately after usage sessions, we were able to discover how participants felt about each experience. Matching their responses to actual network performance let us zero in on the true drivers of satisfaction.

    The 1,500 people who took part in the study—customers of all major U.S. cellular carriers—represented the full spectrum of age groups and income levels. Over the course of the project, we collected some 100 gigabytes of data about their usage. And because we captured the information on individual customers, we were able to segment them and their usage patterns and analyze the data on an extremely granular level—even, if so desired, by employment status and credit score.

    We collected approximately 300,000 customer-satisfaction surveys. These pop-up questionnaires allowed participants not only to rate the experience (on a scale of 1 to 5) but also to tell us what factors—such as excessive pauses in a video, poor quality in video display, or lengthy waits for maps to load—may have hindered its success. Through the surveys, we asked participants how satisfied they were with network speed and how it compared with their expectations. To measure actual speed, we used 30-second sampling windows while an app was running, recording the amount of data being used each second and calculating an average.

    In the end, what we had wasn’t an idea of how customers were using applications and the network. Rather, we had a clear picture of that usage. For the companies that build those applications and networks, this picture provides a crucial first step for improving their offerings, giving customers what they want and giving themselves a competitive edge.

    The vast cache of data we collected—on both usage and the experience—led to insights, presented below, that can help telcos target and tailor network investments, keeping capital expenditures in check or even reducing them. Indeed, we estimate that annual capex savings of more than 10% are possible. These same insights can also help app developers, content providers, and device manufacturers make better decisions about how to optimize their offerings.

    In all cases, the payoff of this deep understanding of consumer behavior and preferences is a true win-win deal: customers enjoy a better experience, and providers can invest less and realize better returns.

    Note: This report was originally published in November 2015. This version revises labeling for observed speeds. It has also been updated to reflect subsequent developments in the telecom market.

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