Customer Retention Meets Customer Relevance

Thursday September 08,2016

Adhish Kulkarni CMO

A year on since we published a post on “rebooting loyalty” for the digital age (​A Formula To  Reboot Loyalty​), it's interesting to see how players in the telco industry have been addressing  the notion of customer retention and loyalty.

In assessing retention and loyalty strategies in more than 50 global markets, it’s clear many of  the specific tactics speak to the unique needs of the individual market landscape and its consumers. However, looking at the collective shifts made over the last year, it’s equally evident that we’ve  moved from what was once an acquisition-­centric mindset all the way through a decidedly retention era. Today the industry has evolved and is now laser­-focused on delivering relevance at scale and in ​real time.

Telco is uniquely positioned to ­­deliver real­time experiences and maximize the “last millisecond” mindset of consumers. It comes as no surprise that market conditions continue to be challenging around the globe, with a growing list of negative forces impacting profitability such as:-

  • Reduction in roaming charges
  • Removal of contract lock-­ins
  • Disruptive OTT entrants
  • All­-you­-can eat offers
  • Higher subscriber acquisition costs
  • Collapsing premium content revenues
  • With customer “ownership” shared between device manufacturers, OS owners, telcos and OTT  brands, cutting through the noise and justifying value to an ever­demanding and, now, less loyal  customer, remains a huge challenge.

Telcos, have recognised this for the past few years, and not surprisingly, have delivered a flurry of initiatives in their fight back. But unlike previous years where players adopted   defensive mindsets such as walled gardens, blocked OTT calling and high charges out­-of­-bundle, we now see companies adopting a more proactive approach to embrace the changing landscape and consumer. This includes aspects like quad play, investing in content and embracing OTT.

This feeds directly into the idea mentioned earlier, that today, we’re immersed in a new, relevance ­first era, defined by customer engagement and experiences. Along with this reorganisation has come an increased focus on customer experience management and, with it, natural retention. It’s something topping countless C­-level agendas, not just in mature markets, but also in emerging markets, where we see a number of initiatives leap­ frogging more established European counterparts. Given how easy it is to switch your mobile operator, ensuring a positive customer experience is now paramount. And, in theory, telcos should be  able to leverage vast data and customer history to personalise and optimise customer interactions ­­again, delivering meaningful real­time relevance at scale. However, in practice, legacy systems and lack of intelligent, real-­time marketing tools make it difficult for companies to deliver the experiences consumers crave.

A classic example is management of out­ of­ bundle charges. In these scenarios, it should be very easy for mobile operators to alert customers that their voice or data allowance is about to run  out ­­ and that if they don't add a bolt­-on, they could face a shockingly high bill at the end of the month. This is one example of a quick win anchored in true customer-­first relevance ­­ it’s a powerful service that links directly back to the customer’s individual experience with a brand. Telcos can implement bill shock controls, and rapidly reduce churn and increase Net Promoter Scores (NPS) within a single billing cycle, ­­another hot button topic for telcos, particularly their C-­suite leadership.

Value Statement is a compelling personalised customer experience. This provides customers with a clear view on all the “value” they’re are entitled to from the operator. All too often, customers don't take advantage of the benefits afforded to  them. Sometimes it’s a “top of mind” issue, while in other situations, customers simply don't  know they’re eligible. Our client has seen positive results in terms of recall and NPS uplift  through the Value statement initiative. It speaks directly to today’s most prominent consumer demand: meaningful, relevant value that support their day­-to-­day activities. The more targeted value they can secure from their telco provider and subsequent experience, the more  engaged, more loyal and more (potentially) profitable they become. Bill shock management is another of a number of areas of innovative, relevance­-centric customer management activities, in which telcos are investing.

“Surprise and delight” is another tried and tested approach, where customers are selected in a seemingly random manner for prizes and offers. This is a double edged sword, with a small  number of customers having positive experiences while most of the base suffers from lack of recognition. And personalised recognition is a key variable for customer satisfaction, whether it’s honoring tenure, spend or some other variable ­­ a variable that speaks to the specific  relationship a customer has with the telco brand.

We see this work best when telcos employ a layer of surprise and delight rewards along-side a more structured loyalty programme. With CRM machinery operating behind the scene, telcos  can target high value customers at risk of churn with relevant “random acts of kindness” while engaging the rest of the base via a more structured loyalty programme. Our research has shown that consumers love to be surprised every so often, but generally like the control and transparency that goes with a tiered, structured programme. This approach accomplishes both.

The telco fight back via loyalty initiatives, better real­time customer experience management,  and value communication are all part of a broader strategy to be customer centric as telcos  evolve into digital life enablers from communication providers. As we move further from the first  era of marketing ­­ acquisition ­­ and, even, through the retention period, we now find ourselves firmly planted in act three: ​the ​relationship era​. And it’s an era marked by relevance, personalisation and meaningful, real­time consumer experiences, all of which is supported by  these seismic and ongoing global shifts. It’s a long, iterative journey but, already, it’s clear 2016  has moved and ​is moving in the right direction, anchored by many of its most forward-­looking players.

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