Six proven customer experience strategies that build loyalty

Written by on September 1, 2017 in Features, Guest Blog with 0 Comments

By Mohd KhairilX / Shutterstock.com

In the spring of 2017, Openet, with European Communications, surveyed attitudes to customer experience in the telecoms industry which threw up some pretty interesting results, prime among them:

Customer experience is a vitally important success factor in the competitive telecoms market.

At a time when customers struggle to differentiate service providers on the basis of price, service offering or network coverage, nothing seems to keep them onboard like the great quality of experience.

Telcos are (generally) pretty poor at customer service.

The reasons for this are manifold – though sometimes (historically at least) are quite rational –

  • As an industry, for longer than anyone can remember, our DNA has been in engineering. Our attention is grabbed by the physical – the network, the handsets and all the other ordnance that is required to keep a telco working – and has to be wrenched round to (somewhat reluctantly) face the customer. It has been thus since time immemorial.
  • Traditionally, customer service made very little difference to telco success. For the best part of a century, most fixed operators were monopolies or cosily co-existing duopolies. You don’t need an MBA from Harvard to know that monopoly power and customer service are uneasy bedfellows – customer service typically comes down to a simple ‘take it or leave it’. Even the launch of mobile communications (which most governments were determined to ensure was an open and competitive industry) made little difference – demand outstripped supply for so long that almost all CSPs could turn handsome profits on the new technology without having to try too hard to ‘delight’ the customer.
  • Finally, telcos are pretty mature businesses. The older mobile operators have been successful and very large-scale consumer businesses for a quarter of a century, and over that time most have organically built up a fine spaghetti of IT (itself evolving fast over the same period) to support their customers. Multiple systems, of varying ages, designed largely for workhorse performance rather than real-time responsiveness, do not respond well to demands for agility. And migrating all that back-office to something more lively is not something that most telcos contemplate lightly.

None of this washes with customers, of course – they just want something that feels good and works well – ideally, something that gives them what businesses such as banking, retail and travel seem capable of delivering in the 21st century.

So to summarise, as an industry, we’re not very interested in the customer, it’s never made much difference, and it’s all a bit difficult. Hmmm…

It’s tough for telcos to get customer experience right. And it’s easy to get downhearted and feel that in the face of all this legacy, and these customer demands, they’re just never going to sort it out. Customers will forever stay with their telco despite, not because of, the experience that the operator provides.

We don’t agree. In fact, we think that, if we study other industries and businesses with a reputation for delivering a good customer experience (which for argument’s sake we’ll define as ‘meeting or exceeding customer expectations in a way that provides competitive differentiation in the addressed market’) we see that good customer experience isn’t always about high-tech (though a little doesn’t hurt). Sometimes it’s about designing and working the business in a more imaginative way, to lure and then retain the customer.

So, here are six strategies that seem to work outside of telco, and some thoughts on how and whether they can be applied to telecoms – particularly as telcos diversify into ever-broader service offerings.

What do other industries do? (1). Tiered loyalty programmes

As offered by British Airways, hotel chains, and other airlines. More usage = more points. Points get you flights and upgrades.
Note that airline loyalty programmes don’t necessarily equate to love for the airline, but they are remarkably effective in keeping customer’s business. And customers like them – the average US household is enrolled in 18 loyalty programmes (though only active in eight).[1]

What would a telco do?

A simple points approach could work for telcos, too. Start off just offering points for spending. Then vary points to encourage the use of new, or different services so that the loyalty scheme became a way to influence customer behaviour. Provide Bronze, Silver, and Gold-level memberships to reflect customer longevity and spend. Allow customers to trade points for subscription payments, phone and service upgrades, special promotions and so on.

How difficult could that be?

Medium. A points-based loyalty system could be introduced as an adjunct solution, driven largely out of charging and billing.

What do other industries do? (2). Loyalty cards

Offering every 10th purchase free – as offered by Starbucks, other coffee shops, hairdressers, and other businesses with which customers tend to have regular engagement. Every tenth coffee, haircut, whatever, free.

What would a telco do?

A telco could do something similar, but without requiring a physical card – for example, offering customers every 5th Gb of data for free, or every 12th month (ideally the renewal month) for free… Customers could use their free data automatically, or rack it up to use at their discretion.

How difficult could that be?

Medium. A virtual ‘loyalty card’ system could be introduced as an adjunct solution, driven largely out of policy control and charging.

What do other industries do? (3). Appeal to quality & good taste.

 This may not sound like much, but it sustains John Lewis, Fortnum & Mason, Bloomingdales and similar middle-to-high-end retailers in many countries. And 88% of respondents to recent surveys[2] indicated that quality is a key factor in their decision to remain loyal to a brand – even more than customer service. The key? Unostentatious, unshowy quality that appeals to customers who are not price-driven.

What would a telco do?

Telcos would look at their range of offerings, perhaps limiting it to a small range of very good, non-flashy handsets. Service bundles would be pleasingly simple – not the cheapest, but straightforward. The focus would be on service quality, competence, maturity of approach. The customer would always be right.

How difficult could that be?

Low. Largely effected through strategic choices and marketing. Difficult to achieve in the short-term for established CSPs. Easier for a new operator or MVNO.

What do other industries do? (4). Develop a closed ecosystem

Driven by tech and style, such as that which sustains Apple and makes devotees of their customers. The offering is ‘inwardly compatible’, outwardly not. Customers become voluntary prisoners in exchange for something great.

What would a telco do?

Be Apple. Hard to imagine a telco (or any other business) coming up with the combination of technology, design and ‘x factor’ that has created Apple’s extraordinary customer loyalty. Other options might include exclusive Apple resale relationships, hosting an Apple MVNO venture, or being acquired by Apple. We’re thinking out of the box here.

How difficult could that be?

Very high. Off the scale, in fact.

What do other industries do? (5). Membership.

Football clubs like Manchester United or Fenerbhace and private members clubs in London and New York establish a psychological tie-in which becomes very hard for members to break – even when (for football fans at least) the ‘customer experience’ is less than great.

What would a telco do?

Telcos would look for natural ‘affinity’ groups and aim to engender a sense of ‘belonging’, mutual support between customers and identification with the brand. Would almost certainly require telcos to establish sub-brands and target younger consumers (pre-customers) who would be susceptible to subtle promotions to establish the coolness of the brand and tribalism.

How difficult could that be?

Medium. Low cost, but a long game which would require very nuanced marketing. ‘Membership’ systems could be adjunct to the existing IT and relatively low-tech.[3]

What do other industries do? (6). An unashamedly high-end pitch

Such as, say, Luis Vuitton or Tumi offer, to people who have large disposable incomes and like to advertise the fact. Has been done before to some extent with Vertu but the market could perhaps sustain another similar offer, particularly as handset technology and evolution has somewhat stabilised.

What would a telco do?

Create a sub-brand for extremely high-end matching equipment, personal concierge services and so on. (Toyota/ Lexus, Nissan/Infiniti model).

How difficult could that be?

Medium but would require high capital investment in stock, personalization, personal services and well-focused (costly) marketing. Sub-brand could lend itself to a standalone highly-focused CRM and customer support platform.

Conclusion

Improving customer experience is a challenge for the telecoms industry, but part of the difficulty may be that telco is too introspective. Perhaps, instead of looking for better, more engaging ways to do the things that telecoms already does (which rarely seems to excite the consumer), it should be looking for very different things to do.

The set of examples and use-cases that we’ve collated here work in adjacent industries which face many of the same challenges as telecoms – competing in a limited market and endeavouring to maximise the lifetime value of the customer. Could any of them work for your business?

 

[1] Colloquy, “The Billion Member March: The 2011 COLLOQUY Loyalty Census”

[2] http://www.loyalty.de/wp-content/uploads/cf-survey-results-brand-loyalty.pdf

[3] https://www.openet.com /membership

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Robert Machin

About the Author

About the Author: Robert has worked in the telecommunications industry for more years than he cares to remember and is a regular contributor to industry forums, conferences and publications, most commonly on the impact of new technologies on billing, charging and the customer experience. He is currently helping Openet to develop its proposition to the wholesale and virtual operator market. .

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