Data Summary
60.3 million mobile youth accounts will be churned by end of 2010. Operators will lose over $2 billion due to churned accounts. The decreasing cost of churn is driven mainly by a decline in spending by Indonesian youth.
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Background Article
Key Facts
- In 2010 60.3 million youth accounts will be churned causing a loss of over $2 billion for mobile operators.
- There is no loyalty among Indonesian youth for service providers. They always go for the cheapest plan.
- The ‘Blackberry Revolution’ in Indonesia has shown that youth do not necessarily always go for the cheap option. Aspirational values also drive loyalty and build a brand.
Article
60.3 million mobile youth accounts will be churned by end of 2010. Operators will lose over $2 billion due to churned accounts. The decreasing cost of churn is driven mainly by a decline in spending by Indonesian youth.
As mobile operators in Indonesia engaged in a price war, the youth population perceived them as expendable commodities cherry picking between different service providers depending on the latest discounts available. In a YouthLab survey of 228 Indonesian youth aged 17-24, spending on mobile operators was ranked fourth below Going Out, Food and Transport. Indonesian youth clearly fail to see mobile operators with any sense of brand affinity. Instead, they pledged their loyalty to handset manufacturers like Nokia, Samsung and the rapidly growing Blackberry.
Blackberry in particular provides fascinating insights on how to dominate the mindshare of Indonesian youth. While priced below iPhone at US$500, Blackberry handsets are still targeted towards the aspirational middle class of urban Indonesia. With cheap internet plans (US$ 17 for a month of unlimited surfing),Indonesian youth have been using its in-built Blackberry Messanger (BBM) to send and receive messages thus bypassing spending on SMS altogether. The proliferation of mobile Internet and rise in use of online social services like Facebook and Twitter has contributed to the growth of Blackberry usage.
BBM, besides being free, also reinforces the consumers’ offline social network by allowing them to setup groups and share PINs. Above all, Blackberry’s biggest draw on the youth population is that it is perceived as status symbol – a device fit for business executives in the hands of trendy young Indonesians. While those who own one profess their love for Blackberries, others long to own it to fulfill their aspirational needs. Blackberry fan clubs in Indonesia meet every month at coffee shops to swap tips and show off new models of the Research in Motion brand. Established service providers like Indosat, Excelkomindo and Telekomsel have failed to claim such loyalty from consumers. It’s no surprise Indonesian youth have no brand affinity towards service providers leading to high churn rates.
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