Becoming Customer-Centric: Evolving Relationship between Telcos and their Customers
Like many industries in the modern era, the telecommunications industry is under intense pressure to adapt to its customers’ needs and provide increasing value to a customer base that has become empowered by technology.
As we are all aware, the telecommunications industry is one affected by intense competition and a significant difficulty for players to differentiate their brand. It’s an industry plagued by high churn rates and decreasing ARPUs in an environment where digital advances are transforming traditional value chain positioning.
The years of pursuing a strategy of customer and company acquisition for growth is no longer sustainable for Telcos. With saturation levels almost reached, the onus has switched to customer retention. To develop a successful customer retention policy Telcos must now become more customer-centric, providing their subscribers with excellent customer experience and building an emotive bond between both parties.
Through the correct execution of a worthy loyalty system, a provider can differentiate itself to appeal to competitors’ subscribers while also building loyalty with existing customers.
Where Are Telcos Going Wrong?
But why is there such a lack of initiative in this increasingly important element of customer satisfaction? In a 2014 study by Capgemini Consulting, 96% of the social media sentiment examined towards loyalty programs belonging to telecommunications brands was negative. So we can clearly see that the vast majority of providers are doing this all wrong.
In the same study, the three main factors attributing to the negative feelings were as follows:
-44% cited a lack of relevance in the rewards offered. Rewards not tailored to the specific needs of the individual customer resulted in dismay and disengagement from the program. Many of those surveyed could easily deduce that the primary driving feature of these programs was to drive more sales rather than provide value to the user.
-33% felt that an absence of a seamless omni-channel experience hindered the overall effectiveness of the program. A poor user experience that disrupted comfortable use over multiple devices caused too much friction amongst users.
-17% felt that customer service problems were to blame for their lack of satisfaction. Most of those surveyed felt that the resolving of any issues was too complicated or time-consuming and, ultimately, not worth the effort.
How Do Telcos Optimize Their Loyalty Schemes?
So how can a mobile communications provider truly deliver the experience required to delight their customers?
Firstly, the modern, tech-savvy customers are more diverse in their tastes and purchasing habits, meaning that providers must discover ways to tailor to the desires of multiple, hyper-specific segments.
Telcos now have at their disposal all the tools needed to gather an exorbitant amount of behavioural, locational and preferential data from their customers. Right now, and not just in the future, vast importance belies on their abilities to harness and apply this information in the right way.
What must be implemented is a standardized system to collate all this big data of customers; a system that works across all departments and offerings to create a single, horizontal customer information bank.
Subsequently, this wealth of comprehensive analytics can then be exploited by brands to deliver super-targeted, personalized value and rewards that delight the end user. Loyalty schemes that feature such personalization and segmentation are the ones that succeed in driving positive feelings amongst customers.
Secondly, user experience is paramount to the success of any loyalty scheme. With the average Telco customer’s using on average 3 different devices per day, a seamless presence over multiple channels and devices represents huge convenience to a user.
Customers need to be able to begin and end their journey on the channel of their choice, without friction or complication. Redemption of rewards, especially, must be as straightforward as possible.
Embracing these two major elements of success into a loyalty scheme that is relevant, attainable and economically advantageous will give Telcos a high opportunity of achieving a positive ROI on their endeavor.
O2 Priority Moments
Looking towards loyalty schemes that have fulfilled these challenges and proved huge successes to both the customer and the network provider, we arrive at the “Priority Moments” program launched by O2 Ireland in 2009 (previously O2 Treats) and by O2 UK in 2011.
Both the “Priority Moments” initiatives received acclaim from both the consumers and the media. Customers of O2 could access exclusive offers and competitions that provided real economic value and were tailored to the specific needs of each customer segment. “Priority Moments” also delivered rewards according to the user’s location, ensuring that these hyper-local rewards were indeed relevant.
The program was fully accessible through web, mobile web, app and SMS channels. The omni-channel ecosystem ensured a frictionless ease of use and redemption.
The beauty of the scheme was that rewards were delivered solely for being a subscriber to the network, rather than performing regular purchases or other measurable actions. Some of the most frequently redeemed rewards from the loyalty scheme included cinema tickets, discounted meals, free coffees and random “moments” designed to surprise and delight subscribers to the scheme.
“Priority Moments” in Ireland registered over 200,000 active users making over 3 million redemptions before the takeover of O2 by Three (check out the new 3Plus program which replaced “Priority Moments”).
Currently, the UK version of the scheme boasts that 75 offers are viewed every second, with over 1 billion offers viewed to date. “Priority Moments” UK continues to be the fasting growing loyalty program in the UK. Figures show the program has generated a churn benefit of 2.5%, with subscribers 6.2% less likely to leave the network. Users of the scheme also registered an ARPU that was £2.20 higher per month than non-users. This equated to a collective £84 million per year increase in ARPU from those who subscribed to the program.
Moving Forward for Mobile Operators
So as you’ve read, the benefits that an omni-channel, customer-centric loyalty program can have on the overall success of a mobile operator is huge. The transformation to digital brings many challenges across the organization, but also creates a dearth of possibilities to build a long-lasting relationship between brand and subscriber.
As OTTs and market saturation threaten to overhaul the traditional value chain positioning of the modern mobile operator, well executed, user-focused loyalty programs present real high-growth opportunities for the future.
Channelforge specializes in omni-channel loyalty schemes such as “Priority Moments” that drive positive engagement and monetization. If you wish to talk to us about collaboration, don’t hesitate to get in touch!