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One of the perks of my job as head of marketing at Amdocs is that I get to speak often with service providers around the world. I have noticed that the loaded word “loyalty” frequently comes up in these discussions. Service providers want to know how they can create greater customer loyalty and what they can offer their customers to trigger stronger brand affiliation.
To answer this question, we recently conducted a survey with Informa Telecoms and Media of 40 service providers around the globe. One of our main topics of focus was the importance of customer loyalty to service providers. Perhaps unsurprisingly, the importance of loyalty is growing in the eyes of service providers. Seventy percent said customer retention and loyalty had been regarded as a low priority by their organizations just two years ago, with marketing strategy focused on customer acquisition and market share. But 82% of service providers said that customer loyalty programs would be “very important” or “important” over the next five years to their companies’ strategies. To give one of many possible examples, the CEO of Orange said that Orange will excel in customer experience and become No. 1 in customer loyalty.
Historically, many service providers talked about the significance of customer loyalty, but from an investment perspective, very few carriers truly invested. The combination of market saturation in mature markets, as well as intensifying competition across the globe from both traditional and nontraditional competition (mobile virtual network operators and over-the-top players), has put a new emphasis on loyalty.
The harsh reality is that today loyalty equals growth. The only way to increase average revenue per user in mature markets is to increase wallet share within service providers’ existing base — by offering more services and attractive offers to customers.
We also focused on determining which aspects of loyalty service providers feel are important. We found that they still focus on the basics and believe the main drivers for churn are still related to the quality of core services — such as voice quality, capacity and coverage. In comparing these findings to a global consumer survey commissioned by Amdocs and conducted by Coleman Parkes last summer, we see that there is a big gap between what providers feel is important and what consumers really value. It’s old loyalty versus new loyalty.
Topping the list for consumers were requests such as increased device selection, greater, more detailed knowledge of the customer, more proactive offerings and customer service, tailored deals and better rewards for existing customers (such as the best rates and devices).
Today’s consumers assume coverage and quality are mere table stakes that get service providers into the game — in order to win their loyalty, service providers must focus on getting to know them better and offering attractive services and support. This is probably why upon assuming the role of CEO at Telstra, David Thodey said: “I’m an agent of the customer. I like customers … but I do like change, because you’ve got to change the business to be focused on the customer.”
These findings suggest that providers should be focusing more on long-term loyalty processes. Most of today’s providers have short-term retention programs to address a specific trend. The reward and point programs that some providers have introduced are no longer enough, because they do not create an emotional engagement with the consumer. U.S. Cellular is working to create just such an emotional connection with its “Belief Project,” which the company’s executives say was designed to rectify common consumer complaints, by protecting against bill shock, replacing dead phone batteries at no charge, offering one-and-done contracts, etc.
What consumers are asking for requires longer-term loyalty that truly promotes the desired customer experience each individual is seeking. Amdocs believes there is a five-dimensional approach to loyalty: culture, measurement, consistency, proactive and social. Only by addressing all of these over a long term can service providers truly create loyalty.
