So when does your service provider finally start taking notice of you?
In most cases, it’s only when you’ve told them you’re about to leave them and move to a rival operator. All of a sudden, you have their attention – and a number of tempting offers to consider, particularly in terms of subsidized smartphone upgrades.
On the other hand, new and loyal customers receive the short end of the stick, according to a recent Amdocs-Informa Telecoms and Media survey into service providers’ customer retention strategy.
But this is a mistake, and some service providers are beginning to realize this. As Aaron Souppouris from The Verge reported, AT&T is presently trialing a new pilot loyalty program called AT&T Plus, with the hope of keeping its most important customers loyal by showering them with special offers and preferential service.
There’s a sound reason behind looking for different ways to retain customers – it’s becoming “difficult and costly” to try to hold on to potential churners by offering them an expensive subsidized smartphone, according to PricewaterhouseCoopers in their 2011 survey of North American wireless carriers:
“ Several major operators have recently warned that increased subsidies from the introduction of popular smartphones will cause material financial changes”
In fact, it’s so costly, that some service providers are already beginning to wish they hadn’t started dishing out subsidized handsets. Andy Patrizio in Brighthand explains that on average, carriers pay $450 for a phone, and sell it for only $200. It then takes them several months to make that money back through the cost of the monthly package to the subscriber, leading operators to lose their profit margin.
And more significantly, these subsidies are not necessarily even helping to keep the customer loyal. PwC’s report No wires attached: 2011 North American wireless industry survey points out that customer loyalty is on the wane, with the average length of postpaid customer relationships dropping to 48 months in the 2011 survey, from 59 months the year before.
The decline in customer loyalty can be arrested, but only if service providers succeed in creating an emotional bond with the subscriber, based on an excellent customer experience throughout the customer lifecycle, and not just in its final days.
In fact, customer loyalty programs can become a new center of growth, provided that operators understand what their customers really want and act on this immediately, all the way through the contract period.
Simply throwing a subsidized smartphone at a churning customer is not the best way to grow.
BLOGGER: JEFF BARAK