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 with a new wireless carrier every year are coming from another wireless provider. It means they are already churners. With telecommunications loyalty being so low, there’s a big problem.
When a customer is lost, the telecom company doesn’t just lose future revenue from this customer, but also the resources it spent to acquire that customer in the first place. It’s not a secret that it costs hundreds of dollars to acquire a new customer in most telecom industries.
Even though it’s bluntly clear that the situation seems bleak as far as telecommunications loyalty is concerned, the industry has done nothing concrete and revolutionary to reduce churn apart from a new phone with a 2-year contract and a recent slight migration toward the expanded pre-paid phone options instead of the traditional two-year contracts.
Frankly speaking, both approaches are weak and ineffective considering the current scenario where customers now are bombarded with tons of competitive products and services all offering similar incentive packages. There is no clear motivation for the user to stay with a specific telecom brand. There is absolutely zero differentiation. Clearly, there is a need to move beyond this antiquated method…and a telecommunications loyalty program can be the first step in that attempt.
Increase Retention & Reduce Churn in the Telecom Industry with These Strategies
Accenture reports that 77% of customers do not stay as loyal to brands as they were three years ago. Like every other industry, the telecom industry should shift its focus more on customer retention.
Research by Frederick Reichheld of Bain & Company says that increasing customer retention rates by only 5% can amplify profits by 25% to 95%.
Acquiring a new customer requires you to spend 10 to 25 times more than what you have to shell out in retaining a customer. Customer retention, therefore, is a fool-proof approach to reduce churn and grow your business to even greater heights.
Read on to know the best strategies for customer retention:
Focus on Your Customer’s Needs and Feedback
Customer churn doesn’t happen for no reason. It’s typically a result of not responding or adequately addressing customer requests or queries, or customers what are disappointed with your service. Fulfilling your customers’ expectations and focusing on their current needs is the best strategy to retain them. To keep your customers satisfied, be responsive and engage with your customers across multiple touchpoints.
Be available to your customers whenever they require you and immediately take action on their feedback and complaints. You can also conduct a survey for customers who canceled your service to identify the problems and address them to improve the quality of your service.
Create a Great Customer Experience
An inability to offer a seamless experience to your customers can lead them to cancel your service. Keeping your customers waiting for a long time to resolve their issues, and frustrating them by making them call you for the same problem again and again increases the rate of attrition.
To address this issue, you should ensure you never disappoint your customers and consistently deliver great experiences through the omnichannel approach. This way customers won’t have to wait and can contact you using their preferred channel to get an immediate response. You should also ensure smooth transitioning from one channel to another, so customers never have to explain their issue from the beginning each time, which would be irritating for them.
Include Loyalty Programs
Loyalty programs are not expensive to execute and are useful in increasing customer lifetime value. Being one of the best customer retention strategies in the telecom industry, a loyalty program improves retention by rewarding customers who continue making purchases.
Customers switch to other service providers when they are not acknowledged or rewarded. Loyalty programs are an effective marketing tool to keep them engaged and prevent them from switching to your competitors.
From Annex Cloud’s own client experience and data, we’ve seen that within the first ten months a telecommunications loyalty program will decrease churn by 12%.
Let’s see why telecommunications loyalty programs can be so beneficial, and what it takes to reach that success.
To create, nurture, and develop loyalty among customers, the first thing you need is unified, accurate customer data. This is because you need real-time information about your customers’ purchases, behaviors, and preferences. Based on this, you can personalize communications and offers, as well as identify and reward your best customers and convert them into brand advocates. You can’t do these things without robust first-party customer data.
This problem of data unification is much more difficult due to the telecom industry’s cannibalistic pursuit of mergers and acquisitions. These changes cause data to be scattered across multiple customer databases along with duplications and inconsistencies. Thus, the data gets distributed across multiple silos without getting seamlessly integrated with other available business data; resulting in a single facet of the overall customer profile, rather than a full picture. Consequently, it’s not uncommon to see that the same person may get a different customer experience when he interacts with the business via a store, website, or call center, as they don’t have a complete and holistic view of the customer profile. Of course, CRM systems try to give a “360-degree” view of the customer, but due to the multiplicity of ongoing activities, they fail to give a truly integrated customer view.
Loyalty technology can push robust first-party across your tech stack, so every customer-facing department has a comprehensive, unified customer view they can access and leverage in real-time. This enables timely, relevant communications and promotions.
A loyalty program can house and integrate data from:
To learn more about these data collection, segmentation, and targeting capabilities, don’t miss this blog post.
After sitting on such a large and rich repository of data, a telecom company can plan their loyalty-boosting endeavors by deciding whom to send a loyalty program communication and whom to reward. Also, they can find a pattern, if there is any, among the people who are leaving their services.
In other words, if most of the customers are turning to a specific competitor, they can analyze their plans and act accordingly. In short, with fully fleshed-out data and a telecommunications loyalty program at their disposal, they can do everything to boost loyal behavior. And believe me…this sort of hook is a must in the ridiculously cluttered telecom industry.
Keep in mind that unlike retention, which is about keeping existing customers, loyalty is about growth. Loyalty is a strategic, proactive approach that keeps existing customers engaged, increases customer lifetime value, rewards your best customers, and improves new customer acquisition.
Currently, 65% of service providers only initiate a retention process when the customer is on the verge of leaving. But loyalty programs act proactively by consistently rewarding customers for loyal behaviors and activity. In short, loyalty is prevention and retention is a cure. We all know which one is better!
Moreover, until now, telecom companies have pinpointed their loyal customers based on their customers’ ARPU (Average Revenue Per User). In fact, 90% of telecom businesses measure customer loyalty by churn rates. However, it’s a misleading method as it is a determination based upon the potential to churn or churned customers.
A loyalty solution provides a more scientific, holistic, and quantifiable way to determine a loyal customer by using various yardsticks such as satisfaction, retention, and loyal activity. Naturally, once the identification of loyal customers becomes accurate, the whole world of boosting loyalty is much easier. Ad and communication targeting improves The responsiveness of those targeted customers will always be high, which leads to a higher customer lifetime value.
When you have the right data and the mindset, then you can really begin to hone in on some of your goals. Consider some of the following, which were devised for an MVNO (mobile virtual network operator):
After you’ve defined your goals, you can move on to program design and implement. Learn more about Annex Cloud’s proven success process for the telecom industry.