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Quick tips for earning customer loyalty in a cut-throat marketby
26th Mar 2013
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Efrat Nakibly provides four best practices that can help businesses build loyalty and sustain market share.
Earning customer loyalty is always a challenge - regardless of your market. But in today’s telecom cut-throat industry, it is almost mission impossible. With mobile subscribers swiftly switching providers in search for the best price offer, it is understandable why more than 40% of CMOs admit that their brand loyalty programs underperform or produce erratic results. Is it possible to earn subscribers’ loyalty in a fiercely-competitive market?
Despite the onslaught on their prices, some operators do succeed in building loyalty and sustaining their market share. Here are four best practices that have helped deliver results.
Target both emotional and behavioural loyalty
What does it mean when we say a customer is ‘loyal’ to a brand? A distinction is commonly made between emotional (also called attitudinal) loyalty and behavioural loyalty. Emotional loyalty refers to a state of mind and the positive attitude towards a brand, and is measured using metrics such as brand preference or Net Promoter Score. Behavioural loyalty, on the other hand, looks at the actual conduct of a customer.
It is tempting to dismiss emotional loyalty and focus only on customer actions, since they can be easily linked to financial results. Indeed, in the telecommunications domain most loyalty programs focus entirely on behavioural loyalty. Nevertheless, behaviour does not provide the full picture. Customers may behave loyal only because they have no other alternative or because prices are low. Once a better price is found, ‘loyalty’ may quickly vanish.
Attitudinal loyalty is the other side of the coin. While it has no immediate economic impact, emotional loyalty is glue that points to a customer’s satisfaction level and can drive future behaviour. Therefore, both types of loyalty are important and should be addressed.
Adopt a holistic approach to customer loyalty
Reward programs of mobile operators typically operate in a silo, disconnected from other subscriber interactions, below-the-line activities, and the overall customer life cycle. Instead, customer loyalty should be regarded as a strategic effort, fully synchronized and integrated within all customer touch points.
Reward-based programs should only be a single dimension of a larger ‘loyalty puzzle’ in which an operator builds rewarding relationships with subscribers, using a proactive, continuous engagement. For instance, consider a scenario where a new subscriber with a new phone number has very few incoming calls. That customer is then automatically offered 50 free text messages to notify her friends of the new number. While such an interaction is not necessarily part of a loyalty program, it no doubt affects subscriber satisfaction and loyalty.
Personalise your offerings
Loyalty activities such as rewards and point redemption mechanisms should be tailored to fit each subscriber’s behaviour and preferences. For example, network bundle prizes can be tailored to the usage patterns of a subscriber (“Get free 60 international minutes to Argentina”). A customer known to be a film aficionado will be offered movie tickets rather than free coffee, and so on.
Personalising offerings and rewards has a direct impact on user satisfaction and appreciation, building both behavioural and emotional loyalty.
Measure multiple KPIs
Marketers tend to exclusively focus on metrics that measure behaviour, such as engagement in a loyalty program and the percentage of user who redeemed points. While these metrics are absolutely valuable, remember that the overall objective of your loyalty efforts is not short-term sales such as increasing network usage, but rather building long-term loyalty.
Measuring a wider set of KPIs that also includes churn rate reduction and NPS (Net Promoter Score), will allow you to evaluate both behavioural and emotional aspects and better assess your customers’ loyalty in a wider context.
Achieving customer loyalty is a Promethean task that extends beyond the typical loyalty program. It requires on-going efforts, an organisational-wide commitment, and probably most of all- the ability to personalise the experience and interaction for each and every customer.
Efrat Nakibly is director of corporate marketing at Pontis.
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