Retention is for wimps: What telcos hope to learn from Harley Davidson’s approach to loyalty

29th Jan 2015

There’s a quote in Harley Davidson’s annual report that proudly boasts: “Retention is for wimps. We measure the percent of customers who have our name tattooed on one of their body parts.”

While the image of the person with a Harley Davidson logo tattoo emblazoned across their chest is a fairly easy one to conjure up, it’s harder to picture too many people doing the same with, say, a Vodafone or Huawei logo.

But is this about to change? Perhaps not so much where tattoos are concerned (with the exception, perhaps, of the odd well-sponsored sports star), but if this week’s Customer Experience Management in Telecoms conference in London is anything to go by, the sentiment behind the quote is something that the whole telecoms sector is in the process of focusing more and more attention towards.

According to T-Mobile Hungary’s deputy marketing director, Beata Kovacs, a speaker at the event and original champion of Harley Davidson’s self-assured strapline, customer loyalty is now the key battleground for telecoms providers over end-of-contract retention, and the switch in focus is fostering a whole new mindset in what represents customer experience in the sector, as a result:

“Previously we’ve relied on the discount game to get repeat business, but in the discount business nobody can win.

“We are all waking up to the fact that retention isn’t quite enough, as we are seeing that 27% of satisfied customers still defect to another brand. Customer satisfaction is now no certainty that customers will stay with us. What we really need to do is build into the emotional part of the relationship, because customers are demanding more.”

Kovacs suggested a reimagining of loyalty schemes in the sector and a greater focus on delivery better interactions throughout customer journeys, in order to capture the imagination of their network subscribers, long-term.

However, trends in other sectors including retail and travel suggest that loyalty schemes are, themselves, struggling to deliver on customer expectations.

Planet Retail’s global research director, Natalie Berg recently predicted the “death of the supermarket loyalty card”, while research from the Grass Roots Group also revealed that 54% of UK consumers believe it takes too long to earn rewards with loyalty schemes.

And Tim Deluca-Smith, global head of marketing at WDS and chairman for day one at the CEM in Telecoms event, believes the industry is currently in a state of flux having previously spent so many years focused on price-based acquisition and retention strategies:   

“If you go back to the early days, competition was fierce, so the whole industry got into a spiral of price wars. Even now, if you look at how telecom providers sell their offers on the high street, it’s largely based on price, and that has created a whole generation of consumers that associate value with price.

“The problem is, while the industry did wake up to the importance of retention over acquisition a number of years back, it had already created an ecosystem based around these pricing models, and it’s very challenging to suddenly change that.

“You can buy retention, but you can’t buy loyalty. The telecoms industry is in quite a unique but quite a dangerous position, because most of the providers don’t want to be seen as another utility, but for the most part, that’s what consumers see them as. Therefore we’re seeing these cycles of value-adds from providers in the bid to improve loyalty; i.e. operators launching media platforms and becoming content publishers. But then there’s the speed, quality of service issues…

"It’s really tricky for [Telcos] to define customer experience because it’s so difficult for them to deliver on, which is why we're seeing all of these different ideas around loyalty now coming to the fore."       

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