Best practices that keep consumers engaged in loyalty programs by telecommunication companies include offering loyalty program rewards that are relevant to their consumer base and that are worthwhile to consumers in terms of value, using mobile technology in engaging customers during the duration of rewards programs in addition to or over physical alternatives, and using a multichannel marketing strategy in the promotion of customer loyalty programs. We have detailed our findings in the sections that follow below.
Loyalty Program Rewards are Relevant and Worthwhile
- A common feature in reward programs across various industries, including the telecommunication industry, is ensuring the incentives of the program are meaningful and worthwhile to customers.
- Customers that are engaged by relevant reward systems return twice as often to bring more business to a company. Consequently, it is paramount to set up a good system that will keep customers engaged with the loyalty program so as to ensure they keep on coming back.
- Reward programs should also be easy to use across all customer categories to ensure all types of customers are effectively engaged.
- For instance, in 2016, T-Mobile, an American telecommunications company, launched a loyalty program that included freebies on Tuesdays, a free share of stock for each primary account holder (with the opportunity to earn more with each customer referral), and an hour of free WiFi on every GoGo-enabled flight.
- Tuesday’s initial wave of freebies included Wendy’s Frosties, Domino’s pizza, and Warcraft tickets. These are neither irrelevant nor low quality rewards because they applied to a wide range of customers and offered value on their loyalty to T-Mobile.
- To ensure rewards are relevant and worthwhile to consumers, telecommunication firms may also consider partnering with top consumer brands. An example of this is the 2016 partnership between AT&T and Macy’s, RiteAid, and Exxon Mobile, which allowed customers to earn and redeem points across the participating brands.
Mobile Tech in Reward Programs Over Physical Alternatives
- Most consumers, especially consumers within the telecommunication industry, do not want to carry around cumbersome physical cards in order to participate in a rewards program.
- According to studies, 70% of customers are more inclined to join a loyalty program if it is accessible via their mobile device. Additionally, around one-third of millennials reported that they do not like loyalty programs because most of them require carrying around cards. Using mobile technology to target such consumers in addition to/in replacement of these cards eliminates this complaint.
- Most companies are now phasing out the use of cards in favor of mobile-based approaches and as a result, it is anticipated that 3 billion loyalty cards will be mobile by 2020.
- The top two reasons as to why consumers do not participate in loyalty programs that they are members of are they do not have their loyalty cards on them and they do not remember that they are participants of the programs.
- These two reasons can be resolved with the use of mobile technology because mobile solutions such as loyalty reward apps are more convenient and visible to consumers.
- As companies in the forefront of the use of mobile technology, telecommunication companies should implement mobile-based loyalty programs in order to gain an engaged customer base over the duration of such programs.
- A good example of this is the mySprint Rewards app that is available on both Android and iOS. The app can be used by Sprint customers to unlock amazing perks and great deals on shopping, travel and more in a fast, easy and free manner.
Consumer Loyalty Programs Across Multiple Channels
- Only a few companies advertise their loyalty programs and it is very uncommon to see any social media posts or marketing emails on loyalty programs.
- Consequently, another multi-industry best practice is to promote loyalty programs on social media and use a few emails to inform customers of the programs.
- The use of direct emails and social media posts can help “attract more visits and increase purchase frequency while reminding customers that their membership in a program offers many privileges.”
- Essentially, keeping in touch with customers ensures they are actively engaged in a loyalty program because they will remain aware of its existence.
- Additionally, telecommunication companies should also test various incentives in email campaigns to see what is most effective. For instance, businesses can determine which subject lines get the most opens and what email cadence improves consumer engagement.
- Social media is another increasingly popular way of keeping a brand in the minds of consumers. A healthy social media presence in today’s digital age serves as a constant reminder to consumers and should be used to market loyalty rewards programs while keeping consumers engaged.
Loyalty Programs – Most Successful: United States Telecom Industry
Two of the more-successful loyalty programs in the U.S. telecom industry are T-Mobile Tuesdays and AT&T Thanks.
1. T-Mobile Tuesdays
- The T-Mobile Tuesdays loyalty program provides T-Mobile customers with exclusive deals, prizes, and/or free giveaways every week on Tuesdays.
- Those promotions are included within its T-Mobile Tuesdays app.
- The free giveaways offered through the program are for/redeemable through companies such as Panda Express, Denny’s, Dunkin’ Donuts, Groupon, Petco, Shell, and Redbox, among others.
- Additionally, T-Mobile always gives away its own products through the loyalty program, such as hats and backpacks, which customers can redeem in a T-Mobile store. Prizes are also awarded through the T-Mobile Tuesdays program, such as vacations, gift cards, and smartphones, among others.
- One reason why T-Mobile Tuesdays has been successful at keeping customers engaged is because of the many offers provided to customers, which has fueled the participation in the program.
- To demonstrate the program’s reach, the following are statistics we found about customers’ participation in T-Mobile Tuesdays: (1) “205 million fun freebies and deals” have been redeemed through the program since its inception in 2017; (2) More than “239 million gallons of gas” have been pumped by T-Mobile Tuesdays members; (3) 50 million discounted/free food offers have been used, (4) “1.3 million gallons of free coffee” have been consumed, (5) “52 million hours of movies” have been watched; (6) “38 million entertainment offers” have been redeemed, and (7) “20 million transportation offers” have been redeemed.
- A second reason why T-Mobile Tuesdays has been successful at keeping customers engaged is because of its strong emphasis on providing awesome deals to customers. As an illustration of that, T-Mobile’s CEO, John Legere, stated: “Our customers are a big freaking deal, so we’re gonna keep bringing them big…freaking…deals. When we say we won’t stop, we mean it.”
2. AT&T Thanks
- AT&T Thanks is a loyalty program that provides AT&T customers with promotions and perks.
- The program is unique in that it doesn’t require customers to accumulate points or even signup in order to be eligible for and redeem the offers. As such, the loyalty program has been described as one that “goes where others can’t” and is “[u]nlike other loyalty programs.”
- The offers and perks provided through the program are for dining, live music, enhanced services through AT&T, and entertainment.
- Dining offers are available for restaurants such as Corner Bakery Cafe, while entertainment offers include event tickets and VIP experiences.
- Music offers include “[u]p-close shows . . . [and] pre-sale tickets,” while enhanced services from AT&T include “[a]ccess priority inventory, same-day delivery and other premium services.”
- One reason why AT&T Thanks has been successful at keeping customers engaged is because AT&T listens to feedback from customers and then provides personalized experiences that are in-line with what customers really want.
- A second reasons why AT&T Thanks has been successful at keeping customers engaged is because AT&T “offer[s] multiple ways and plans customers can choose [from] to connect to [its] rewards programs.”
- A third reason why AT&T Thanks has been successful at keeping customers engaged is because it provides local offers in an “effort to engage with customers where they are.”
Cause Of Churn – Telecom Industry: Loyalty Programs
From our findings, some of the largest causes of churn in the telecom industry’s loyalty programs and retention rates in the United States include ineffective loyalty programs, increasing competitive alternatives, loyalty program members forgetting they are enrolled in programs, companies offering unappealing rewards in their loyalty programs, and the absence of win back strategies that companies can use to bring back lost customers. We have looked at these cause in detail below.
1. Ineffective Loyalty Programs
- Company’s across various industries depend on loyalty programs to reduce churn and improve customer retention rates. This is because loyalty programs have a powerful and proven impact on customer retention.
- However, loyalty programs that are present in American industries such as the telecom industry often suffer from low customer response rates. This is normally caused by low customer engagement and a lack of personalized and dynamic offerings in the loyalty programs.
- Ineffective loyalty programs are an issue in the telecom industry because the more ineffective a program becomes, the lower the customer response rate falls. A low response rate in turn results to a significant amount of churn and millions in losses per month for mobile carriers.
- In the United States, the churn rate among the major four carriers, AT&T, Verizon, T-Mobile, and Sprint, is projected to be 1.9 percent. In addition, the monthly loss from churn per carrier is approximately $65 million.
2. Increasing Competitive Alternatives
- Another major cause of churn in loyalty programs within the telecom industry of the United States is the presence of competitors. The presence of competition has increased in recent times because of the adoption of retention marketing by companies in various industries.
- In essence, the biggest hurdle for loyalty programs is that all companies have one. Consequently, as soon as customers feel a specific company’s program does not meet their needs and expectations, they leave for better alternatives.
- The availability of many options that customers are free to choose from increases competition in the industry where losing companies have to deal with an increased churn rate.
- Increasing competitive alternatives is an issue because the loss of customers to competitors ends up severely impacting loyalty programs resulting in a negatively affected customer retention rate for organizations in the United States telecom industry.
- According to a study by New York University, general customer churn in the American telecom industry occurs every 19 months. Because this figure represents a general churn rate, we concluded that churn rates that are specific to loyalty programs in telecom companies must be higher.
3. Loyalty Program Members Forgetting They are Enrolled
- Most consumers in the United States are enrolled in numerous loyalty programs. However, most of these consumers have also stopped engaging with these programs.
- A halt in engagements naturally leads in consumers forgetting that they were ever enrolled in the loyalty programs. This results in a significant churn rate from such programs that even features previously loyal customers.
- The issue in this is that telecom consumers that have forgotten they are enrolled in a particular loyalty program might end up signing up to program offerings from competitors.
- The best way to avoid this is to send regular reminders to consumers via email and offer rewards and incentives that will encourage customers to come back.
4. Offering Unappealing Rewards in Loyalty Programs
- Consumers participate in loyalty programs because of the incentives that are attached by companies on such programs. However, even though customers might be interested in the same product offering from a company, they are not necessarily interested in the same type of rewards.
- Consequently, when a telecom company offers only one type of reward or rewards that do not add value to a customer’s journey, the perceived value of such a company’s loyalty program to prospective members may end up suffering.
- This presents an issue especially in highly competitive industries such as the telecom industry because customers will end up leaving in search of better value from competitors resulting in a higher churn rate.
- To avoid this problem, brands can simply diversify the rewards they offer in loyalty programs.
5. Absence of Customer Win Back Strategies
- High churn rates in the United States telecom industry are as a result of the absence of win back strategies.
- Key protocols in winning back customers that were previously lost via churn include “customer segmentation and grading and the use of churn models; understanding the reasons for churn, researching the customer’s present needs, and knowing the types of defectors: development of a recovery plan i.e. both short-term and longer-term to re-establish trust and value perception; measure, evaluate, and refine the plan.”
- Most organizations in the United States telecom industry do not have robust win back strategies that can be used to bring back lost customers.
- This fact presents an issue because the absence of a win back strategy results in higher churn rates without the possibility of recovery.
Factors Associated With How To Increase Customer Retention – Telecom Industry: Loyalty Programs
Four of the largest/most-impactful factors associated with increasing customer retention within the U.S. telecom industry are for telecom companies to (1) maintain a customer-segment focus, (2) provide quality first-contact resolution, (3) provide an omnichannel customer experience, and (4) send customers advanced service-related notifications.
1. Maintain a Customer-Segment Focus
- One of the four largest/most-impactful factors associated with increasing customer retention within the telecom industry is for telecom companies to maintain a customer-segment focus.
- This means that telecom companies need to focus on offering products/services tailored to the needs of a particular household or individual. For example, some people will only have phone service through the telecom company, while others while have phone and internet services (i.e. consumer segments).
- Maintaining a customer-segment focus is particularly important “when customers buy more than one service from a [telecom] company.”
- This factor is effective for increasing telecom companies’ customer retention because it can “enable the delivery of better customer service” and thereby lower the odds of customer churn.
2. First-Contact Resolution
- First-contact resolution is among the four largest/most-impactful factors associated with increasing customer retention within the telecom industry.
- As its name implies, first-contact resolution means that a customer’s issue is resolved by the first company resource that the customer consults, such as a customer support representative. This problem is heightened among telecom companies, as many have poor ratings for first-contact resolution.
- Two ways that telecom companies can improve their first-contact resolution efforts is by equipping customer support representatives with sufficient information from which to answer a wide-array of customer issues and by investing in customer support agents’ training.
- This factor is effective for increasing telecom companies’ customer retention because their scores for customer satisfaction can be bolstered through quality first-contact resolution and because the issues that customers are calling customer service representatives about can inform the telecom companies about customers’ dislikes and issues that are driving them to consider churning.
3. Provide an Omnichannel Customer Experience
- Among the four largest/most-impactful factors associated with increasing customer retention within the telecom industry is providing an omnichannel customer experience. Now that many customers are communicating with companies via multiple channels, it’s imperative that telecom companies ensure that the customer experience they provide is consistent across those channels.
- For example, in the absence of an omnichannel customer experience, if a customer begins a live chat about an issue and halfway through decides to call about it instead, oftentimes the representative who answers the phone won’t know what the customer has already said about the issue in the live chat channel.
- A simple, technological solution for providing an omnichannel customer experience is through “unified communications platforms.”
- This factor is effective for increasing telecom companies’ customer retention because doing so can “provide seamless transitions for customers” across the many channels they have access to and, in so doing, can provide them with a customer experience that might be difficult for them to find elsewhere.
4. Send Customers Advanced Service-Related Notifications
- The advanced provision of service-related notifications is among the four largest factors associated with increasing customer retention within the telecom industry.
- This factor makes the list because customers now expect that they will be able to use their communication devices, whether computers or phones, 24/7 without interruption or delay.
- As an example, best practice for a customer who’s about to reach their data limit is to notify him/her in advance of that event occurring, as a way to prevent an avoidable service interruption.
- The goal of sending proactive service-related notifications is for telecom companies to contact the customer before the customer contacts the company about a matter.
- This factor is effective for increasing telecom companies’ customer retention because a loss of service is “an experience . . . [that customers] will go to extremes to avoid” which could potentially include a customer switching telecom companies if severe enough.