A New View of Telecommunications Loyalty

by | Nov 29, 2016 | Customer Loyalty

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.

What are the Customer Retention Strategies in Telecom Industry and how to Reduce Churn?

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 Customers’ Need and Feedback

Customer churn does not take place out of the blue, it’s because when you leave your customers’ request or queries unattended or they are disappointed with your service. Fulfilling your customers’ expectations and focusing on their current needs is the best strategy in the telecom industry to retain them. To keep your customers satisfied, you always need to be on your toe and attend to 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 Good Customer Experience

An inability to offer a seamless experience to your customers can lead them to cancel your service. Keeping your customers wait for a long 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 that you never disappoint your customers and consistently enhance their experiences through the omnichannel approach. This way customers will not have to face longer wait time and can contact a company through their preferred channel to get an immediate response. You should also ensure smooth transitioning from one channel to another so that customers never have to explain their issue from the beginning, which would be irritating for them.

Include Loyalty Programs

Loyalty programs are not expensive to execute and 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%.

telecom loyalty results

Let’s see why telecommunications loyalty programs can be so beneficial, and what it takes to reach that success.

Telecommunications Loyalty: A Unified Customer View

To create, nurture and develop a feel of loyalty among customers, the first thing that you need to have with you is granular and accurate customer data. This is because you have to have real-time information about what your customers are buying, how frequently they are buying and the upper limit of their purchases. Based on this, you can pinpoint your loyal or best customers in order to reward them or convert them into brand advocates. You can’t do any of the above-mentioned things without a proper collection of customers’ 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 to gets distributed across multiple silos without getting seamlessly integrated with other available business lines; 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.

As the entire ecosystem of loyalty is built around the collection of data- the name of the customers, their addresses, their magnitude, and frequency of purchases- loyalty program can be considered as a blanket under which data is safely and regularly collected. Besides, as loyalty is able to operate on an omnichannel model of business, telecom companies can gather the data of the users who are approaching them through multiple channels.

A loyalty program can house and integrate data from:

  • RFM dashboards (that is, purchase recency, frequency, and amount)
  • Advocate marketing actions (e.g. when a user has successfully referred a friend, when a review they’ve written is approved, and so on)
  • Customer loyalty (including when loyalty points are expiring, when a user is on the threshold of earning a reward, etc.)
  • Location of purchase or delivery
  • Type of product purchased
  • Interactions with the business in-store, online, in-app, or on social
  • Any data imported from a CRM, ERP, ESP, or personalization engine, among other third-party data sources

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.

Telecommunications Loyalty: A New Approach

Keep in mind that unlike retention, which is about the preservation and a possession of a customer, loyalty is about growth…and that’s where the loyalty approach differs drastically with the old CRM views. The old one is about being reactive and trying to hold the customer when he is on the verge of leaving a telecom provider.

Currently, 65% of service providers only initiate a retention process when the customer has started the process of leaving. But loyalty programs act proactively by consistently rewarding the customer for loyal behaviors and activity. It’s like taking care that the customer will not reach to the decision of breaking his ties with the company. 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) or cutting churn. 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 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 loyalty-boosting tricks look simple. Ad and communication targeting becomes much sharper. The responsiveness of those targeted customers will always be high, as they have found something in the company to stay with the company. It goes without saying that it germinates 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):

telecom loyalty strategic objectives crop

After you’ve defined these goals, you can finally move on to program design and implementation. We talk more about both goals and program design in this post about telecommunications loyalty best practices!

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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