Price outweighs one bill for consumer telecommunications purchases

There can be little doubt that bundling telecommunications services in a package with a single bill is a powerful customer retention and attraction tool, but a new survey from KPMG concludes that consumers don't give as much weight to bundles as previously thought.Consumers & Convergence II: The Search for Value, Choice and Convenience in the Digital Age indicates service pricing is a more powerful motivating factor for consumers when they decide to choose a service. The study doesn't, however, suggest that prices for telecommunications services are too high. "I don't think by definition says all prices are too high," Kathy Cunningham, industry sector leader for KPMG's communications and media practice," tells Network Letter. "It says that customers are becoming more and more price sensitive." From 30,000 feet, 57% of consumers globally indicate that pricing is "the most important driver" in the decision to sign up for a bundle. The Canadian view is more dramatic with 75% of those surveyed noting that price was a key factor, while about 7% point to the convenience of one bill as being the most important factor. "If there is not a differentiator in quality and if don't believe that the benefit of one bill is a huge convenience, then by definition I think pricing becomes more important," Cunningham says. Bundles with multiple services on a single bill are a mainstay in the telecommunications sector. Telephone companies, cable operators and now ISPs providing telephony and TV offer deep discounts multi-service packages to entice customers to sign up for service, or to convince them not to switch to another provider. Results from the survey demonstrate, however, that this convenience isn't as powerful as price. According to the survey, 56% of survey respondents would break a contract with their existing provider to get one element of a bundle cheaper from another service provider. "What consumers are telling us through their responses is that triple-play bundles are not as sticky as service carriers had hoped: just as price is the defining characteristic for selecting a service provider of a particular bundle of services, price is the number one reason a consumer would consider breaking a service contract with a carrier," the report states. This reality creates considerable confusion for the carriers which rely so heavily on the bundle as a value proposition, particularly when the survey shows consumers prefer choice over convenience. "This underscores the urgent need for carriers to change their business model to one that allows consumers to define their service parameters in ways that are more interactive and self-customizing, and less pre-packaged," reads the report.

Price outweighs one bill for consumer telecommunications purchases

News | October 24, 2007

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