Use loyalty to stand out from competitors and build brand advocates

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There is a clear gap in the industry: unspecific customer retention schemes don’t spark engagement with customer lifestyles. Most platforms do not offer dedicated customer loyalty management solutions and fail to address specific needs of communication service providers (CSPs). Deprioritising loyalty and treating it as an afterthought of customer management leaves operators and platforms vulnerable to competitors. We have a wealth of experience supporting customer loyalty management propositions. For example, we have developed enhancing banking loyalty with Barclays. Another case study is how we developed an app-based go-to-market loyalty scheme with SLA Digital.

RDC has expert understanding of customer loyalty management scheme architectures, how they work and what needs improving. Read more about our innovative approach to loyalty, developed specifically for the TMT industry, in our white paper.

Loyalty programs disrupt competitive price cuts

With threats from OTT players, saturated markets and fierce competition, customer loyalty is at huge risk. As ARPUs fall, operators must focus on retaining core customers, saving huge sums of money on last minute interventions. Operators too often engage in price wars to win customers from competitors leading to significant acquisition costs.

In comparison, loyal customers bring with them a host of benefits:

1. Repeat business: Loyal customers continue doing business with a company

2. Positive word-of-mouth: Product and service recommendations come from loyal customers. This leads to new customers and increased business

3. Increased lifetime value: Loyal customers spend more money during their relationship with a company, leading to increased profitability

4. Reduced marketing costs: It is cheaper to retain existing customers than to acquire new ones. As a result, companies with loyal customers save money on marketing and advertising

5. Greater understanding of customer needs: Loyal customers give better insights into their needs and preferences

6. More stable revenue: Companies with a large base of loyal customers have a more stable revenue stream. In the long term this enables effective future planning and strategic decision making.

A common threat for telecom brands is the lack of personal touch. A closed deal doesn’t form inherent loyalty to the service provider. Customers start looking at other offers often before their contract has expired. Brands need to offer goods and services that go beyond the expected and give customers benefits they truly want.  This is where customer loyalty management steps in.

Compete using loyalty

Loyalty schemes play a crucial role in the telecoms industry as they not only retain customers but also attract new ones. Offering incentives and rewards to customers creates a sense of brand loyalty and differentiation from competitors. Additionally, these schemes provide valuable insights into customer behaviour and preferences, allowing companies to tailor services and improve customer satisfaction. Overall, the implementation of loyalty schemes in the telecoms industry is a smart business strategy that leads to increased revenue and customer retention.

Automation for loyalty

Automation through preference prediction, communication timing and relevance, customer-reward matching, and peer recommendation are all crucial elements of modern marketing strategies. These techniques allow businesses to reach their target audience in an efficient and effective manner, ultimately leading to increased sales and customer loyalty.

Preference prediction involves using data and analytics to predict a customer’s preferences and behaviour. This includes analysing past purchases, browsing history, and social media engagement. By understanding a customer’s preferences, businesses tailor their marketing efforts to better meet their needs. For example, if a customer frequently purchases clothing from a certain brand, the business can suggest similar items and offer special deals on those items.

Communication timing and relevance are also crucial for effective marketing automation. Understanding when a customer is most likely to be receptive to marketing messages allows businesses to schedule communications for the right time. Additionally, by ensuring that the content of the message is relevant to the customer, businesses can increase the likelihood of the engagement with the message.

Customer-reward matching is another important aspect of marketing automation. Offering rewards and incentives that align with customer preferences allows businesses to increase loyalty and engagement. For example, if a customer frequently purchases beauty products, the business can offer a discount on a makeup brush set.

Lastly, peer recommendation is a powerful tool for marketing automation. By leveraging the power of social proof, businesses can encourage customers to recommend products and services to their friends and family. This is done through referral programs or by allowing customers to easily share products on social media. Using peer recommendation, businesses increase brand awareness and drive sales.

Loyalty ecosystems should be open and collaborative

Traditional loyalty schemes reward customers with points, based on how much money they spend. Points are then redeemed for products, services or discounts. However, this “earn & burn” model does not offer meaningful engagement, as a result long term stickiness is not earned. Ideally, companies should focus on creating long-term trust and value, becoming embedded into customer lifestyles without them even noticing.

Loyalty ecosystems are a new model for providing customers with services and products that may lie outside of a brand’s scope. They are classified as either contained or open.

A contained ecosystem consists of companies operating under the same parent company. Take Amazon and Whole Foods, for example. When the retail giant bought the grocery chain, Whole Foods began offering Amazon Prime members a discount. Similarly, members could start ordering groceries from Whole Foods via their Prime accounts. Both initiatives created new entry points for customers as well as increasing brand affinity.

Open ecosystems consist of several complementary organisations partnering to give customers benefits in all areas of their lives. For instance, a hotel chain partnering with a restaurant chain to encourage hotel guests to dine at partner restaurants for discounted rates. Similarly, the hotel could partner with a car rental agency, offering rewards points for renting.

By working with competitors to create loyalty ecosystems, business provide their customers with relevant services and products. This improves retention.

Lifestyle based loyalty wins customers

The objective of a loyalty strategy is to maximise customer lifetime value (CLV) through deeper customer engagement. Typically CLV is the amount of spend per year multiplied by the number of years as a customer. We take this concept further. Could we incentivise more sales through peer recommendation? What if an incentive scheme can reduce cost-to-serve with self care and community engagement to improve profitability? Can we facilitate a greater share of wallet?

Most loyalty strategies directly incentivise two activities, staying for longer and spending more on products. We propose a loyalty strategy that incentivises a richer set of activities, whilst expanding the choice of offers. There are three key initiatives for growing loyalty: mobile engagement, data management and automation.

Mobile engagement for loyalty

Mobile engagement is the process of keeping users interacting with a mobile app or website. One popular strategy is gamification. This which involves incorporating game design elements into the user experience. Success leads to increase motivation to engage and is achieved using points, badges, leader boards, and challenges.

Another effective strategy for mobile engagement is building a user community. This is done through social features such as forums, chats, and user-generated content. A strong user community fosters a sense of belonging by encouraging users to share experiences and insights with others.

Customer referrals are also a powerful tool for mobile engagement. Incentivising existing customers to refer friends and family increases awareness and attracts new users.

Digital marketplaces are often used to increase mobile engagement. Enabling the purchase of products in your app or website creates a convenient experience that keeps customers coming back.

Finally, choices of rewards are also used to increase engagement. Facilitating choice creates personalsation. Users selecting their rewards, be it discount or offer, motivates them to stay engaged with your service.

Data management in loyalty

Data management is a crucial aspect of loyalty schemes. It allows companies to understand customers and tailor offerings to their needs. One key aspect of data management for loyalty schemes is obtaining consent from customers to collect and use their data. This must be done through clear and transparent communication, giving customers the option to opt-out of data collection.

Another important aspect of data management for loyalty schemes is tracking customer behaviour and preferences. This can be done through surveys, focus groups, and analytics tools. Understanding how customers interact with products and services does two things. It helps identify areas for improvement and provide specific offerings to targeted customers.

Self-care functions are also an important aspect of data management for loyalty schemes. These functions allow customers to manage their own data and preferences. This empowers customers to take control of their data while ensuring collected data is accurate and up to date.

Finally, identifying high performing products with a ‘fail-fast’ model is an effective way to optimise loyalty scheme and ensure that you are offering products and services that your customers truly value. This model involves quickly identifying products or services that are not performing well and adjusting or discontinuing them, while also identifying and scaling up products that are performing well. Constant testing and iteration, ensures that loyalty schemes always offer the best possible experience to customers.

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