The Value of Loyalty for Telecoms Brands

December 11, 2018 Catherine Malone

The Loyalty Challenge

Customer retention is a challenge for all industries, but churn rates are particularly high in the telecommunications industry, averaging between 10 and 67% annually. For example, it is estimated that 75% of the 17 to 20 million subscribers signing up with a new wireless carrier every year are coming from another wireless provider. Loyalty is extremely difficult for telecommunications brands to attain, especially due to the lack of differentiation in the product and service offerings.

We spoke with Chris Sullivan, who has experience managing telecommunications clients at Lenati, a marketing and sales strategy consulting firm, about why this is the case and he told us, “In recent years, there's been a massive shift in the telecommunications industry. With T-Mobile's "Uncarrier" moves, it removed long term contracts that led to dependable, recurring income for the major providers (amongst other changes.)”

Successful loyalty programs provide telecommunications brands with the ability to differentiate from the competition and reduce churn. Let’s take a look at some of the benefits telecommunications brands can expect when adopting a loyalty program.

Provide More Than Just Transactional Value

“Historically, the telecommunications market has relied on transactional loyalty - like a free phone when you sign up or unlimited data. Transactional benefits are necessary to help customers get in the door, but adding value over time is what keeps customers and reduces churn,” says Chris Sullivan.

Brands such as T-Mobile are leveraging loyalty initiatives to remind their customers that they value them. Each week T-Mobile partners with brands including Subway, Lyft, Shell, Stubhub, and Zappos to provide their customers with discounts and free items on the T-Mobile Tuesday app. In addition, each week select customers win once-in-a-lifetime prizes such as tickets to the World Series.

Chris Sullivan adds, “There is always a challenge for the big Telco providers because they can be perceived as a commodity, where there's not a lot of value-add. What we've seen recently is these companies creating programs which give customers more than just a phone service. AT&T launched AT&T Thanks which gives customers access to restaurants, concerts or exclusive events and T-Mobile Tuesdays give each customer free perks each week just by signing into an app.”

Keep Customers Engaged Between Renewals & Upgrades

In addition to keeping customers feel valued and appreciated for their loyalty, an effective loyalty program can keep customers engaged so when the time comes to renew the brand is top of mind.” Chris Sullivan adds, “By staying top of mind through a loyalty program or weekly perks, customers have an opportunity to form positive impressions of their carrier rather than seeing the monthly bill come in the mail.”

The goal is to keep customers connected to your brand and satisfied the with the experience so they don’t search for buy-out promotions and freebies from other providers. The value provided by the program should be enough to keep them loyal.  

Help Brands Create Better Customer Experiences

Although customer dissatisfaction in the US reversed a two-year decline last year, research finds telecommunications to be one of the industries consumers dislike most.

It is likely that the rise in mergers in the industry has resulted in silos of customer information which results in disconnect and subpar customer experiences. Omnichannel loyalty programs provide brands with the ability to bridge customer insight across all entities and create seamless customer experiences across all brand touch points. The data collected in a loyalty program enables brands to gather a 360-degree view into their customer, meaning every interaction can be meaningful and relevant, whether in-store, online, or on the phone.

Reduce Advertising Costs & Improve Marketing Strategy

Brands with access to loyalty program data can also identify who their best customers are and surprise and delight them with gifts and bonuses. This also encourages best customers to advocate for the brand and refer their friends and family through positive word of mouth. Loyalty programs can supercharge these referrals by offering incentives through their loyalty program.

Brands can also reduce expensive advertising costs, and be more targeted in their marketing promotions based on the learnings from their customer data. Customer insight can also be applied to identify areas of business growth and win customers from competitors. 

Conclusion

An investment in an omnichannel loyalty and engagement solution for telecommunications brands has the ability to not only attract new customers, but minimize churn rates and retain best customers for longer. Brands can benefit from the customer insight gleaned from loyalty program data to increase customer satisfaction, and even win business from competitors and increase market share.

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