With the current problem of churn facing mobile telecommunications operators, those wanting 'at risk' customers to remain loyal need to tailor specific and compelling programmes for them, according to a new report from global research firm, Strategy Analytics (SA).
According to Strategy Analytics, much of the movement in shares in mature mobile markets over the next few years will be driven by churn.
"Loyalty programmes can be a competitive weapon if used effectively, or a significant profit inhibitor if shotgun approaches are employed," explained David Kerr, vice president of SA's global wireless practice.
According to Kerr, wireless operators need to craft promotional rewards that fit with the key drivers of their target accounts. For example, a reward programme featuring free text messages would be completely wasted on the occasional 'safety net' group which uses mobile phones purely as emergency items.
The report, 'Mobile Customer Loyalty & Retention Strategies', paints a picture of loyalty programmes being 'the icing on the cake of customer retention' but points out that all the icing in the world will not redeem a stale cake.
The view taken by the report's author, Sara Harris, is that customer loyalty is a holistic process over the whole customer lifecycle, and it cannot be viewed in isolation from other events such as acquisition and customer service.
"Operators must set expectations appropriately at the initial activation, and continue to harvest insights into customer loyalty factors by examining calling patterns, ringtone and icon downloads, use of mobile payment and other premium services," said Harris.
Other key findings
The report's other main findings include:
- The loyalty process begins right at the start of the customer lifecycle, in the initial acquisition.
- Loyalty schemes must reward long-term customers, rather than new ones.
- Customer benefit is most cost-effectively provided in kind (rather than financially).
- Loyalty programmes must not be viewed as short-term 'fixes' but rather as integral structural supports of a holistic customer service culture.