A New View of Telecommunications Loyalty

by Bistriti Poddar |

A New View of Telecommunications Loyalty

customer retention strategies in telecom industry

The telecommunications industry occupies a unique space in that it’s less competitive, but customers report being more dissatisfied. Churn rates for telecom companies are high, averaging between 10 and 67% annually. The widespread grimace of this problem can be understood from the fact that roughly 75% of the 17 to 20 million subscribers signing up … Read more

Referral Marketing for Telecom Companies Adds a Personal Touch

referral marketing for telecom

While telecom tech consistently advances, challenges for companies in this sector have never seemed so fierce. There’s severe competition, cord-cutting, ARPU going down, and high churn rates. Furthermore, as per Informa Telecoms & Media’s report, telecom operators’ traditional revenue through voice calls and SMS has been dropping due to enhanced functionalities from OTT players such as Skype, Google, and Whatsapp.

informa telecom survey

Mobiles came into existence to let people communicate via SMS and calls. But people essentially now discount those core capabilities these days. IDC’s 2013 survey suggests that while on their mobiles, people spend a mere 16% of their time on phone calls and the other 84% on activities like browsing the web, communicating by email, using social apps, watching videos or TV, gaming, etc. It’s quite self explanatory then why revenue from the traditional streams has dried up.

The above overlay of the telecom industry’s pain points means that any strategy designed to address them has to have cost-effectiveness as a top priority. It should be able to generate maximum impact with minimum expenditure. This is one of the reasons why referral marketing for telecom companies is a logical move, both for addressing churn and acquisition. After all, the telecommunications industry average conversion rate for referred customers is a massive 42 percent!

Referral Marketing for Telecom Companies Harnesses the True Value of a Loyal Customer

In his December 2003 Harvard Business Review article, Bain consultant Fred Reichheld said, “The value of any one customer does not reside only in what that person buys. In these interconnected days, how your customers feel about you and what they are prepared to tell others about you can influence your revenues and profits just as much.” It implies that the customer’s full value would include a measure of that person’s ability to bring in profitable new customers. And that’s why the old metric of Customer Lifetime Value (CLV) is getting replaced by Customer Total Value (CTV). Referral marketing for telecom companies lets teams systematize this concept and take full advantage of it.

A genuine referral generally converts into sales mainly due to the trust factor. Any kind of traditional advertisement contains a designed message, and is worded by a medium, which is owned by the seller. That’s why consumers generally like to interact with the people who are like them. Known as “Like Me” principle, as put forward by Raluca, it makes customers to follow and trust more to the customer created information rather than the seller created one. This is especially true for the telecom industry, where peer pressure generally acts as a decision maker in selecting the service provider. That’s the prime reason why, as we stated above, the average conversion rate for referred-in customers is a massive 42% in this industry. Surely, a referral program, thus, could help the telecom industry in achieving higher CTV.

Referral Marketing for Telecom Companies Channelizes Positive Customer Sentiments

According to customer behavior experiments, no matter what are the industry, product or service conditions, a satisfied customer is likely to share his positive experience with approximately 3 others. The telecom industry is no exception. Customers who have been happy with your service are really ready to refer your brand to their friends and other people in their vicinity.

The trouble is that most good referral intentions remain just that—good intentions. A poll that tracked the referral intentions and behavior of the customers in the telecom industry found that 81% of the telecom firm’s clients thought they’d recommend a company, but merely 30% actually did. Clearly, though there is a will among telecom customers to send referrals, there is a lack of robust referral infrastructure which will allow them to do so efficiently and regularly.

Additionally and unfortunately, there’s a fair amount of negative customer perception regarding the telcom industries. Referral marketing for telecom companies provides one way to counter that, as it systematically incentivizes and spreads positive sentiment. Plus, when those feelings of goodwill have a familiar face attached to them, it makes the business look friendlier.

H2O Wireless puts a very friendly face on its referral program.
H2O Wireless puts a very friendly face on its referral program.

Referral Marketing for Telecom Companies Broadens Revenue

Just like in every other industry, there are two main ways through which high revenue can be secured. The first is to raise the cost of the product/service and the second one is to enhance the frequency of repeat purchase or first time purchases from the customer’s end.

The first option is almost non-existent for the telecom industry as its territory is starkly marked with intense competition, which has escalated into a price war. We will see in the future that telecom companies will be offering their services at a much cheaper rate. In this realm, a higher price can throw a service provider out of the market almost instantly. This fear is not an unfounded one. The telecom industry has always topped the list when it comes to churn rate. Its customers are extremely price-sensitive, as their kinship with the service provider operates merely at the utility level. There is no emotional involvement. This makes it much easier for them to switch the current service provider for any other one who is ready to lower down his prices. In totality, a price hike is no option for the telecom industry.

Eventually, the telecom company is left with the second option, which is to enhance the frequency of repeat purchase or first time purchases from the customer’s end. A loyalty framework will give you the repeat purchases, but referrals can bolster first time purchases while also rewarding your devoted advocates. As explained in the first point, referrals get translated into sales. Moreover, average order values grow as referred-in customers spend 50% more than non-referred customers. As opposed to discounts to boost acquisitions or price hikes to increase revenue, a conversion through referrals is a much healthier option.

Indeed, there are many reasons to believe that referrals can actually act as a piece that can solve the hard-to-decipher marketing riddle of the telecom industry. Their worth becomes even more prevalent due to their flexibility both in terms of inner and outer structure. Rewards can be tweaked as per the need of the company. Besides, omni-channel referrals are surprisingly simple, and are a major need for many types of telecom providers .

If you’re interested in more information about Refer a Friend, take a look at our best practices white paper, “The Step by Step Guide for a Powerful Referral Program!” And check out the power of Sharing and Referrals and Social Login in our case study with Vivobarefoot–they’re seeing a 10:1 ROI and a 38% increase in orders!

Telecom Loyalty, The Right Way

Telecom Loyalty

In our previous post about telecommunications loyalty, we dissected the need for actionable, unified data, and a mindset in which loyalty is a preventative treatment. After understanding why telecom loyalty programs are so beneficial in reducing churn (by 12% in 10 months from what we’ve seen!) and better marketing to both current and potential customers, it now makes sense to really examine more specific tactics and best practices.

Telecom Loyalty Goals: Don’t Forget About Advocacy!

As noted above, it’s wise to look at any loyalty or customer engagement program as a preventative measure against churn, rather than a cure for when it begins to happen. However, it’s even wiser to think about how the program can help grow your business, rather than just work on the retention side.

Consider the following: If a loyal customer has been with your business for a handful of years, it’s an indicator that they’re satisfied. They’re consequently more likely to recommend your company to friends, follow your company on social, write positive reviews, and so on. These types of actions are known as advocate marketing. When you encourage advocate marketing actions through your loyalty program by offering points for successfully referring friends, contributing photos, etc., you increase engagement, acquisition, conversion, retention, and ROI.

Annex Cloud’s clients who’ve switched from a straightforward, points-only-for-purchase loyalty program to one that rewards advocate marketing actions as well have seen their loyalty program revenue increase by at least 300% within a year. Read our white paper, Advocate Loyalty: A Four-Point Strategy, to learn more about this approach!

H2O Wireless is one telecom loyalty client that’s using this best practice. Customers earn points for purchasing online, recharging their accounts, and activating new phones, but they also get rewarded for referring friends.

telecom loyalty h2o

Here’s a closer look at their referral program.

telecom loyalty h2o refer

By investing in their referral program as well as their loyalty platform, the client was able to both capitalize on and increase current customer satisfaction while thanking their advocates and expanding their base. With both the solutions nested together on one platform, integrations have been a non issue, all the data is unified, and total cost of ownership (TCO) is dramatically less than what it otherwise would be. Businesses can also save a considerable amount of money when they introduce the right benefits into their telecom loyalty programs.

Telecom Loyalty Benefits: Positive Reinforcement is Key

A loyalty program is one of the most effective ways to stay in touch with customers, and it should always be treated as such. After all, 76% of US shoppers think that loyalty programs are part of their relationships with businesses. Many companies agree–64% of retailers say that their loyalty program is their best method of connecting with shoppers.

Your program, just like any communication, is what you make of it. You can engage frequently with your customers, keeping them updated on topics ranging from their loyalty membership status to new promotions to corporate social responsibility causes and new perks. With a good pace of communication, you can motivate customers to continue to earn loyalty points using membership and status as goals. This is significantly less expensive than discounting.

On the other end of the communication and rewards spectrum, if your customers feel that they’re left in the dark, they won’t see a point in remaining in your program unless they receive significant discounts or perks from you. These can quickly add up. telecom loyalty benefits

Take a look at the following points strategy suggestions to gain a better understanding of how exactly to motivate activity within your telecom loyalty program.

telecom loyalty best practices

Here are some very specific loyalty actions for prepaid or no-contract MVNOs. However, the thought process is applicable across the board for telecom loyalty and can inspire other segments.

This strategy has been devised for prepaid or no-contract MVNOs but it can inspire other sectors, too.

Telecom Loyalty Emails

Given our emphasis on frequent communication, it’s obvious that triggered emails are going to be a significant part of your telecom loyalty outreach. Consider sending the following:

  • Welcome to the program
  • Monthly points earning statement
  • Points threshold statement (e.g., “You are X points away from reaching gold status!”)
  • Reward earned
  • Successful advocate marketing actions in loyalty program (e.g., “You successfully referred a friend and earned X points!”)

Telecom Loyalty Reporting

With all the data stored in your loyalty program, it’s vital to have quality software that easily shows you what you need to see. Find a provider whose dashboards will let you effortlessly segment customers, prevent referral fraud, track liability, and understand revenue and program metrics by segment and on a unified level.

Note: For more customer loyalty best practices and inspiration, don’t miss out on our guides, “Customer Retention in 2017: Driving Emotion with Technology” and “Advocate Loyalty: A Four-Point Strategy!

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