Service providers concerned that customer loyalty is waning

22nd Nov 2011

The vast majority of service providers see customer retention and loyalty as a critical factor driving growth and yet two-thirds of them believe customers are less loyal today than two years ago.

The survey, conducted by analyst firm, Informa Telecoms and Media, found that companies are doing too little, too late in terms of addressing customer loyalty issues: 65% of service providers only initiate a retention programme when the customer has started the process of leaving and 90% measure customer loyalty by churn rates. 
The study also highlighted significant organisational challenges that are thwarting loyalty initiatives. In particularly, service and knowledge consistency across channels was flagged up by 94% of respondents, followed by the ability to offer simple, transparent pricing (94%).
Creating one integrated customer profile (89%) was also cited as a vital component in supporting customer retention and loyalty strategies over the next five years.  However only 21% of service providers say they have the necessary collaboration today between their IT and customer retention and loyalty departments to enable this.
Julio Puschel, senior analyst and head of operator strategy for Informa Telecoms and Media, said customers today have many competitive alternatives and service providers will need to rely heavily on loyalty strategies to combat competitors' aggressive offers to attract new subscribers in saturated markets.
"Customer retention and loyalty, far from being a cost centre, will become a new centre of growth, provided that operators understand what their customers really want and devise their offers accordingly. Importantly, customer retention and loyalty programs need to be initiated early in the customer lifecycle and be present during the entire relationship between operators and clients, as opposed to relying on belated efforts to prevent churn," Puschel said.
The study also highlighted some customer loyalty misconceptions: although service providers saw service quality (97%), network coverage (95 per cent), network capacity (92 per cent) and customer care (86%) as the key drivers behind customer loyalty, two thirds of respondents to a separate study commissioned by customer experience systems provider Amdocs, said that personalised services, proactive care and loyalty rewards would win their loyalty.
The Amdocs consumer survey found that network coverage and good customer care were regarded by consumers as basic service requirements and do not comprise competitive differentiators. Amdocs warns that service providers need to engage sooner with customers to prevent churn and require a holistic view of the customer in order to provide services the customer actually wants.  
"The only way to earn loyalty is through deeper customer engagement. Customers demand a high quality experience across all touch points, starting with their first service experience and continuing over the course of the customer's lifetime," said Rebecca Prudhomme, vice president of product and solutions marketing for Amdocs. "To do this, service providers must look at the customer holistically and provide them with a simple, proactive, personalized and consistent experience across all channels of interaction."
The full report is available here Building customer loyalty, a strategy for growth

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