This blog will explore the current state of customer loyalty in the telecommunications industry and innovative strategies that forward-looking companies can implement to retain customers.
The telecommunications industry is going through a major digital transformation. Unsurprisingly, startups and established businesses are responding to these opportunities.
The result is that customer loyalty is more a result of a great customer experience than price alone. Pricing continues to lose its ability to retain customers as competition increases, creating a void that businesses must fill to thrive in a heavily-saturated market.
Contents:
-
4-Step Process for Building Customer Loyalty in the Telecoms Industry
-
Building Customer Loyalty in Telecoms / Utilities Sub-Sectors
Key Takeaways
-
In a competitive market, increasing customer loyalty is crucial for telecom companies to maintain and grow their customer base.
-
Research shows that excellent customer service and positive customer experience (CX) are more effective than price alone in retaining customers.
-
Proactive retention strategies outperform reactive ones; companies should focus on improving service before customers consider leaving.
-
Word of mouth marketing is powerful; satisfied customers can attract potential customers more effectively than traditional marketing campaigns.
-
Implementing a robust loyalty programme with personalised rewards can significantly increase customer commitment and reduce switching costs.
-
Offering omnichannel support enhances customer interactions and responds to customers' preferred communication methods.
-
Transparency in pricing and contracts builds trust and strengthens the relationship with your customer base.
-
Mobile apps can improve customer service, increase engagement, and boost customer spending.
-
Tailoring telecom services and rewards to the target audience's needs can lead to increased sales and customer satisfaction.
Current State and Challenges Facing the Telecoms Industry
With the telecommunications industry heavily saturated and services commoditised, providers are subject to high churn rates, among other issues. Here are some challenges facing the industry today.
Challenge #1: Declining brand loyalty
Telcos must prioritise customer retention efforts.
Customer churn in telecoms can reach up to 67% per year.
The main factor given in this source is the lack of product differentiation. This calls for innovative product (or service) and loyalty strategies to retain customers since acquisition costs are much higher than retention costs.
Challenge #2: Customer shopping frequency
"According to a 2019 survey, 44% of telecom customers actively sought a new provider, while the rest churned passively. They did this either because they were unhappy with the service or because they got a better offer from a competitor"
The report also suggests that the bulk of reactive retention strategies fail. 61% of companies were unsuccessful at trying to retain their customers – typically via discounts or apologies – after contract cancellations.
Meanwhile, 40% of those who switched providers after poor service experiences, would’ve stayed if a better service plan had been offered. With 33% remaining loyal if they thought the company would improve.
The reality is that telecommunications companies today must adopt a proactive approach in order to satisfy and engage customers. Doing so goes a long way towards attracting and retaining them.
Challenge #3: Negative reviews
The aforementioned survey also revealed that 79% of customers shared their negative experience with others and 73% spoke negatively about the company with friends, family, and colleagues.
When we factor in that 92% of consumers trust friend or family recommendations, negative word-of-mouth (NWOM) is far from ideal. Customers hold a huge influence on the success of your acquisition efforts.
That’s why every company should aim to deliver a seamless and memorable experience the moment customers sign up with them. Experience matters just as much as price and quality. Many businesses are learning that the hard way. It comes as no surprise then that about 45% of businesses highlight customer experience as a top priority in the coming years.
4-Step Process for Building Customer Loyalty in the Telecoms Industry
Forbes reported a trend of difficult relationships between the telecommunications industry and consumers. It goes without saying that businesses in the sector must work to actively improve customer satisfaction. Below are a few ways telcos can boost customer satisfaction and loyalty.
Step #1: Improve security
November 2021 saw the UK's Telecommunications Security Act come into effect. This gave Ofcom (the Office of Communications) new powers to ensure UK telecom providers identified and reduced potential security compromises.
This was welcome news as data breaches reached new heights in 2021. The 17% rise in security breaches was attributed to over 400 million more users going online. Meaning a more robust security infrastructure was necessary to protect all users.
As telecom customers use online services, they're becoming more aware of data risks and how their personal information, i.e., payment details, may be vulnerable. A recent survey for example found that about 61% of web users believe their household could be targeted by a cyber attack.
Customers expect telecom providers to protect their personal data and it’s now required by law. Of course, nurturing customer loyalty via a platform like Propello Cloud, also guarantees extra security protection. As our platform operates on the same security model as the MoD, which brings us onto our next point…
Step #2: Launch reward programmes
'75% of consumers prefer companies that offer rewards. A CMO Council report states that 12% of customers switched providers because their current provider failed to reward their loyalty"
Customers want more value and rewards in exchange for brand loyalty. Loyalty programmes with personalised rewards, benefits, additional services, and exclusive partner deals are arguably the best customer retention tool for businesses.
Telecom brands often lack the “personal touch.” You're 54% more likely to lose customers if you don't engage them in a hyper-relevant way. In such cases, customers will most likely search for other offers once their contract expires.
Reward programmes prevent this problem from happening; 70% of customers recommend brands with some form of loyalty scheme. Just remember, the way your loyalty programme works is what determines its success.
For example, to boost retention, rewards must offer real value. If your rewards are random and hard to redeem, your efforts might go to waste and customers will lapse. Tailor customised rewards to the needs and preferences of your key customers to improve your chances of success in loyalty nurturing.
Step #3: Offer omnichannel support
Personalised service used to be as simple as offering customers chat, voice, and email communication channels. Today, customers need more than a multichannel approach. Modern customers want omnichannel experiences and personalised service. They want to be able to seamlessly switch to the most convenient communication channel at any given time.
For example, a customer may call technical support about a subscription issue. After the call, the customer might want a follow up with someone else on another channel a few days later. Omnichannel functionality is pivotal here in order to maintain continuity in conversations across channels.
97% of consumers say that contact centre interactions affect brand loyalty, and 60% of customers will leave a brand if they have bad experiences with the contact centre
The idea is to make communications seamless, frictionless and never frustrating. Customers want to know that help is always available. No matter when, who or where they make contact, the conversation must appear as if it never ended. This goes a long way in creating a pleasant, stress-free and convenient experience.
Step #4: Be transparent with pricing
As of 2020, Ofcom directed telecom providers to notify customers when their contracts were expiring to give them the chance to explore their options.
Less than a year after the announcement, 62% of broadband customers nearing contract expiry either switched to a new deal with their current provider or joined another network. Comparison platforms also experienced a web traffic increase during that period.
The current situation shows that transparency and honesty is essential for building trust. Customers are aware of their shopping options and will definitely find the best deals. This will help with new customer acquisition.
Just because you must notify customers when their contract is due to expire doesn’t mean you need to lose them. Give them a powerful incentive to stay. Rather than offering great rewards to new customers, offer them to those who are loyal.
For example, offer discounted extras to existing customers, show them how much they’ll save in comparison to new customers. Better yet, offer them and anyone they refer to the same discount. People love to share their discount discoveries with others.
Transparency and honesty reassures your customers. Rewarding them for loyalty shows you value them. Customers are less likely to have their heads turned when they know you truly value them.
Building Customer Loyalty in Telecoms / Utilities Sub-Sectors
Mobile networks
Users are quite flexible when choosing between mobile networks. Whilst the lowest-priced operators often get the most customers, other issues like connectivity also influence customer acquisition.
You’d think that network providers with poor services always lose customers due to bad experiences. Yet, despite the issues, most smartphone users stick with their current operators. With only 5% of respondents in 14 markets saying they would be willing to switch operators. This is useful to know. Particularly when one-third of the other 95% say they won’t switch networks because it's too much trouble. Or they fail to see any point of difference in service quality or reward offerings.
Similarly, 42% of Three customers and over 50% of Vodafone, O2, and EE customers in the UK have been loyal for over five years. However, these networks have lower recommendation and satisfaction scores compared to smaller networks. Meaning we can mark their customers as passive loyalists.
What does this mean for mobile network providers?
27% of smartphone users worldwide would recommend their network provider to family and friends. However, one-fifth of those referred, would not choose said provider despite being open to recommendations.
Indeed, they switch twice as often as those who actively favour their operators. This means that mobile network providers must meet the users' expectations and encourage active preference to drive recommendations and boost loyalty.
The potential of loyalty programmes
As the mobile network market evolves, networks must interact with customers in more meaningful ways. This can be achieved by prioritising value-added services.
Loyalty programmes will continue to become more personalised, facilitated by larger customer datasets that allow for more accurate micro-segmentation. Naturally, this will lead to hyper-relevant reward loyalty campaigns, offering enhanced customer experiences.
Digital channels delivering hyper-targeted loyalty programmes will continue to play an integral role in improving customer retention, conversion, and engagement.
Energy Providers
A survey found that only 12% of customers trust their current utility provider. 30% of consumers also said they are less likely to trust a business because of rising costs (loyalty penalties). Once their introductory energy contracts expire, these devoted consumers are often subjected to much higher rates.
When this happens, consumers will often switch service providers and shop around for cheaper prices. In the UK, for instance, millions of people cut off service with their energy providers every year. About six million consumers switched power providers in 2020, according to data compiled by Energy UK.
The potential of loyalty programmes
Consumers are demanding more from energy providers, particularly to make up for the rising cost of living. This is happening at the same time that providers are making a lot more money because the price of energy is going up. Loyalty programmes stand out as a powerful way for energy providers to give back to their customers.
Over 19% of consumers say they are more likely to trust a brand if it relieves the burden of the cost of living crisis by offering relevant discounts. Another 14% will be willing to trust brands that show that they care about their customers.
Customers will respond positively to brands that are committed to offering them relevant, value-adding rewards via a loyalty programme rather than those focusing on pricing alone.
Broadband providers
Broadband customers pay an average £113 loyalty penalty per year after their initial contract period, 43% above the sign-on price. This penalty is much higher compared to other sectors, and over 96% of consumers consider this penalty unfair.
Broadband prices after the contract period are rarely advertised and are typically hard to find. 35% of customers say finding great deals in essential markets is difficult. Meanwhile, 35% of customers know nothing about the loyalty penalty.
18% of loyalty penalty payers echo the sentiments of mobile network customers, saying switching is too hard or time-consuming. Vulnerable groups are the most likely victims of this penalty.
Older customers and low-income groups tend to be more loyal. Customers over 65 are twice as likely as younger customers to have been in the same contract for over 10 years.
What does this mean for broadband providers?
The current situation forces many customers to shop for new deals every 12–18 months. This is the result of the alarming trend of telcos not just ignoring rewards but technically punishing loyalty.
People are realising that most internet service providers care more about attracting new customers than keeping their current ones. Loyal customers need a service package that acknowledges their loyalty. This means no unexpected price hikes or hidden surprises, and a solid loyalty programme.
The potential of loyalty programmes
As broadband competition heats up and consumers lose trust in brands, providers must find a way to offer added value and eliminate the loyalty penalty. Loyalty programmes that offer members exclusive partner deals and value-added services go a long way in achieving differentiation and brand loyalty.
Winning the Battle for Trust and Loyalty
Telcos will always be in demand because of the modern customer’s insatiable appetite for social interaction and entertainment. However, securing customer loyalty and maintaining high retention rates demands careful attention.
Establish your business as a customer favourite by using proven techniques like reward programmes to improve the customer experience and make your brand more appealing as a long-term provider.
FAQs
What are the most effective loyalty programmes for telecom companies?
Effective loyalty programmes offer personalised rewards, tiered benefits, and exclusive deals. They leverage mobile apps for easy access and increase customer engagement. These programmes enhance the customer experience (CX), boost customer commitment, and reduce switching costs in the competitive telecom market.
How can telecom companies use data analytics to enhance customer retention?
Data analytics help telecom companies understand customer behaviour, predict churn, and personalise offerings. By analysing usage patterns and preferences, providers can tailor services, improve the customer experience, and target marketing campaigns effectively. This approach increases customer retention and expands the customer base.
What role does customer feedback play in improving loyalty?
Customer feedback is crucial for improving loyalty in telecoms. It provides insights into customer preferences and pain points, allowing companies to enhance their services. Regular surveys and responsive customer service teams help build stronger relationships with customers and drive positive word-of-mouth marketing.
How can AI and machine learning improve customer satisfaction in the telecom sector?
AI and machine learning enhance customer satisfaction by enabling personalised interactions, predictive maintenance, and efficient problem-solving. These technologies help telecom companies respond to customers quickly, optimise network performance, and provide proactive customer service. This improves the overall customer experience and increases customer commitment.
What strategies can be implemented to reduce customer churn in telecoms?
To reduce churn, telecoms can implement personalised retention offers, improve customer service, and enhance network quality. Providing an excellent customer experience, offering competitive pricing, and leveraging data analytics to predict and prevent churn is key. Regular engagement and loyalty programmes also help maintain customer commitment.
How important is personalised customer service to retaining telecom customers?
Personalised customer service is crucial for retaining telecom customers. It builds stronger relationships, increases customer satisfaction, and promotes loyalty. By tailoring interactions to individual needs and preferences, telecoms can differentiate themselves in a competitive market and reduce customer churn through an enhanced customer experience.
What are some common challenges telecom companies face in maintaining customer loyalty?
Common challenges include high competition, price sensitivity, and rapidly evolving technology. Telecoms struggle with reducing churn, differentiating services, and maintaining network quality. Balancing innovation with customer needs, managing customer expectations, and providing consistent omnichannel experiences are ongoing challenges to maintaining customer loyalty.
How can telecom providers ensure a seamless omni-channel customer experience?
A seamless omnichannel experience requires integrated systems, consistent messaging across platforms, and personalised interactions. Telecoms should ensure smooth transitions between channels, maintain customer history across touchpoints, and provide self-service options. This approach enhances the customer experience and strengthens relationships with customers.
What impact does network infrastructure have on customer loyalty in telecom?
Network infrastructure significantly impacts customer loyalty. Reliable, fast, and wide-reaching networks are fundamental to customer satisfaction. Investments in infrastructure improvements, including the 5G rollout, directly affect service quality and the customer experience. Superior network performance can increase customer retention and attract potential customers through positive word-of-mouth.
How can telecom companies balance technological innovation with customer satisfaction?
Balancing innovation with satisfaction involves focusing on customer-centric technologies, gathering feedback on new features, and ensuring reliable core services. Telecoms should prioritise innovations that enhance the customer experience, such as improved mobile apps and AI-powered customer service while maintaining excellent network performance and responsive customer support.
Author Bio, Written By:
Mark Camp | CEO & Founder at PropelloCloud.com | LinkedIn
Mark is the Founder and CEO of Propello Cloud, an innovative SaaS platform for loyalty and customer engagement. With over 20 years of marketing experience, he is passionate about helping brands boost retention and acquisition with scalable loyalty solutions.
Mark is an expert in loyalty and engagement strategy, having worked with major enterprise clients across industries to drive growth through rewards programmes. He leads Propello Cloud's mission to deliver versatile platforms that help organisations attract, engage and retain customers.
.png){kind=logo}