Amdocs just completed a study with Informa Telecom and Media that highlights the importance of customer retention and loyalty programs.

Sixty-six percent of operators believe customers are less loyal today than they were two years ago and 70 percent of service providers cite customer retention and loyalty as the critical factor for driving growth with a strategic marketing shift from customer acquisition and market share to long-term customer engagement.

Due to market saturation and increasing competition, 82 percent of service providers believe customer loyalty programs will be “very important” or “important” to their company’s strategy over the next five years.

The four key findings of the survey:

  1. Too little, too late: 65 percent of service providers only initiate a retention program when the customer has started the process of leaving, while 90 percent measure customer loyalty by churn rates.
  2. Customer loyalty misconceptions: Service providers saw service quality (97 percent), network coverage (95 percent), network capacity (92 percent) and customer care (86 percent) as the key drivers of customer loyalty. However, a separate study showed that network coverage and customer care are regarded as basic service requirements by customers and are not competitive differentiators — they’re the equivalent to clean bathrooms in the quick service restaurant industry. Two-thirds of customers believe personalized and tailored services, proactive care and reward for being loyal customers win their loyalty.
  3. Organizational challenges block loyalty initiatives: Service and knowledge consistency across channels (94 percent), the ability to offer simple, transparent pricing (94 percent) and creating and an integrated view of the customer (89 percent) are seen as being vital in supporting customer retention and loyalty strategies over the next five years. However, only 21 percent of service providers have the necessary collaboration between their IT, customer retention and loyalty departments to enable this.
  4. Different regions, different churn trends: Most regions show a linear growth trend in customer churn with higher prepaid regions facing the biggest loyalty challenge. The North American market, despite facing the largest competitive threat, is the one market bucking this trend since service providers have adopted loyalty programs centered on building a complete view and more in-depth knowledge of their customers while also initiating loyalty programs tailored to the individual.

Having been a part of the first loyalty program in the cellular phone industry in the early-1990’s the findings of this research are not surprising; however, the lack of adoption of such programs is.

I worked on a customer bonding and customer satisfaction measurement and improvement program for GTE Wireless, now Verizon, that reduced churn by 29 percent in the first year.

In the second year we focused a more personalized program on the top 10 percent heavy users. This more targeted and rewards-based program reduced churn by nine percent and resulted in $16.2 million in saved revenue.

What surprises me most about the study is that 18 years after having worked on a very successful customer loyalty and retention program, is that more is not being done in the U.S., and around the world, to increase retention and reduce churn.

These programs take a lot of work up front; however, once instituted, the increased customer satisfaction and revenue gains provide a significant ROI.

Tom Smith

Experienced marketing professional who has worked with more than 120 clients in 18 different vertical industries. ♦ Differentiate products and services by improving UX and delivering memorable CX to create an emotional connection to the brand. ♦ Obtain insights from analytics to solve business problems and drive revenue. ♦ Develop and implement marketing campaigns that double traffic and leads in three months. ♦ Certified Marketing Automation Professional ♦ Certified Voice of the Customer (VOC) Professional