High Tide Does Not Raise All Boats Equally

This new research examines the relationship between Customer Experience (measured in social NPS®) and brand market share changes in a rapidly growing market, such as smartphones.High Tide Does Not Raise All Boats Equally image Apple diversionHigh Tide Does Not Raise All Boats Equally

The Tide Comes In

The quarter over quarter growth of the smartphones market peaked at 20% during 4Q12, while market share of Apple, the company that arguably created this market, declined during the first 3 quarters of the year. Dramatic growth in holiday-driven demand finally lifted Apple’s market share in 4Q12 to catch up with the overall growth of the market, but it started to lose pace during the very next quarter, and have never recovered yet. Now, Gartner, IDC and others are forecasting a slowdown in the growth of the smartphone market.

What made Apple’s market share growth stumble and what are its chances to right this “boat” going forward?

Apple’s Bump

High Tide Does Not Raise All Boats Equally image Apple share and NPSHigh Tide Does Not Raise All Boats Equally

Looking at the same time period from the Customer Experience perspective, it is easy to notice the dramatic drop in Apple’s social NPS® score in the quarter preceding the diversion. Since I could not find smartphone market share data prior to 4Q11

in Gartner archives, it is not clear in which calendar period the diversion started to form. However, the Customer Experience measurements have never recovered to the last high reading of NPS=12, reached during 4Q11 after two deep declines that coincide with 3 quarters of diversion.

High Tide Does Not Raise All Boats Equally image Apple NPS compositionHigh Tide Does Not Raise All Boats Equally It is possible that recovery from the low point was triggered by the introduction of a new model, as Apple usually does around Q3 every year. I’ll leave this speculation to the Apple watchers who are more familiar with their product launch schedules and general public sentiments associated with these events.

Samsung’s Slump

Samsung’s scenario is more challenging because of the number of different models available on to consumers at the same time periods. While some Samsung models registered very low customer experience scores, the aggregate social NPS® is impressively high.Considering that Samsung’s market share is over 30%, it is not surprising that quarterly changes of the base are relatively High Tide Does Not Raise All Boats Equally image Samsung M share change and NPSHigh Tide Does Not Raise All Boats Equallysmall. The chart does display a startling diversion from the smartphone market chart during 2012 holiday shopping period. During that quarter Samsung market share dropped 4% while overall market growth picked at 21%.Perhaps it is not coincidental that social the NPS score of Samsung smartphones experienced a dramatic drop during preceding quarter – the same quarter Apple registered the lowest NPS score. During 4Q12 Apple market share bounced dramatically to take leadership from Samsung for just one quarter before resuming its slide.

Customer Experience Analysis and Forecasting

Perhaps consumers discovered that the two market leaders are not the only game in town, and the smaller brands had a better reputation of customer experience at that period. Unfortunately I was not able to find market share data for HTC, Motorola or Nokia to test this hypothesis and LG had their own drop during that quarter. Therefore, the others must have been the beneficiary of the market share bump.

One of the most interesting findings is an apparent correlation between NPS and Market Share changes (quarter over quarter). The NPS highs and lows precede market share changes highs and lows by a quarter at least 4 times out of six quarters observed. If this pattern holds, then Samsung is likely to have an excellent 4Q13.

I do not want to imply that patterns and correlations automatically produce predictions, but when they are observed repeatedly and consistently, they can substantially improve our forecasting abilities.

Methodology and Data Sources

  • The market share data is borrowed from Gartner quarterly reports, and the smartphone data became available 1Q12. The social NPS® data is produced by Amplified Analytics opinion mining of customer reviews published online.
  • No survey, questionnaire or any other form of solicitation was used to gather the content. Only unsolicited content, generated by customers of specific smartphones models and published by them online were cached and used for this analysis. Subsequently model specific social NPS® information was aggregated by brand to align with the market share data available publically.
  • The content from 46,597 unique customers of Apple and Samsung smartphones was analyzed with help of Social NPS® On-Demand Monitor.

NPS, Net Promoter, and Net Promoter Score are registered trademarks of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.

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