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What drives customer loyalty?
 

What drives customer loyalty?

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Is there such thing as a loyal mobile subscriber? In many saturated markets the focus is turning to keeping the high-spending customers, keeping them loyal and converting them to enthusiastic ...

Is there such thing as a loyal mobile subscriber? In many saturated markets the focus is turning to keeping the high-spending customers, keeping them loyal and converting them to enthusiastic advocates. This research will provide you with clear, actionable ideas that can help you reduce customer churn.

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    What drives customer loyalty? What drives customer loyalty? Document Transcript

    • Telecoms loyalty: Challenges and opportunities to move beyond the basics and delight customers 29 November 2010 Julio Puschel • Network coverage and service quality are still the main drivers for churn. Operators should address loyalty in a holistic way in order to address all the important gaps in their relationship with their customers. • The prepaid market is definitely important – and it is a challenging segment in which to promote loyalty programs. Some operators are proving successful at creating ways to keep customers for longer periods and increase the volume of their calls and SMS messages. • Operators are migrating customers into digital channels for customer care as way to reduce cost and improve the customer experience. However, these channels need to be intuitive and easy to use – they should direct the customers to the information they are looking for without the customer having to make any significant effort. • Customer life-time value is one of the most important metrics for driving the operators’ strategy. They need to invest and create programs for the different customer segments and life-cycle phases. The new dynamics in the highly-penetrated mobile markets, significant competition and increasing prepaid penetration are forcing operators to put customer loyalty at the center of their strategy. Although operators have implemented new loyalty programs in the last few years – for example, O2 Priority, Orange Wednesday and Vodafone VIP in the UK; Orange in Niger; and US Cellular in the US – they are still facing the challenge of solving basic features such as network quality and coverage (see fig. 1). Fig: 1: What are the main drivers for churn? It is not possible to detach important aspects such as service quality and network coverage from a loyalty strategy as even a very good program will be useless if the customer cannot use the service itself. Consequently, operators need to take a more holistic view if they wish to offer an outstanding experience for customers in all the phases of their relationship with them. Customer experience management (CEM) is a concept normally applied at the operators’ customer channels, but it needs to be part of the entire process, from the operator’s retail store and the service quality to the call-center representative (see fig. 2).www.informatm.com © 2010 Informa Telecoms & Media
    • Fig. 2: Customer Experience Management (CEM) – A holistic view Prepaid is another hot topic for loyalty as it has such a significant penetration of the overall mobile customer base. This is not just the case in the emerging markets, but it also in the Western European and North American mobile markets. The prepaid segment has churn rates that can exceed 50% in some markets and its real-time dynamic presents a challenge to operators aiming to implement any kind of loyalty program. Orange Niger and the pan- African operator Zain were able to overcome this challenge and create significant initiatives and improvements to keep their prepaid customers active and even increase their call volumes. The handset still has a very important role to play in customer loyalty as it provides a good way to lock customers into longer or additional contracts. Subsidies do not appear to have a significant impact on the customer life-time value if they are able to increase the length of the customer’s relationship with the operator. However, subsidizing handsets should be used wisely as a way to award the loyal customer and not as a last-minute effort to retain customers. In terms of customer channels, there is a clear trend that operators are trying to migrate their customers into using digital channels as a way to reduce the cost of their customer service representatives. However, for this to work, the digital channels need to be an attractive alternative – they need to very easy to use and the customers need to able to find the information they need quickly and easily. Vodafone Portugal and MTN South Africa are examples of operators that are helping customers to use digital channels effectively; they are integrating all their information sources, educating their customers through interactive tools and involving different areas within the company to improve training and, consequently, customer care. Customer life-time value is a key metric that allows operators to really understand customer profitability in the different phases of their relationship with their customers. This metric will provide a better view of the customers and help the operators allocate the appropriate investment and loyalty initiatives for the different segments in a way that does not have an impact on their profitability. TMN in Portugal is a good example of an operator that has devised different loyalty programs for different phases in customer life-time cycle – not just allocating the appropriate investment but also implementing action at the right time to avoid customer churn. It is clear that customer loyalty should be approached in a holistic way – integrating the operators’ different areas, technologies and systems. It is now necessary for operators to move beyond the basics and focus on really delighting their customers.www.informatm.com © 2010 Informa Telecoms & Media