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Why loyalty rewards make sense for wireless carriers

in Loyalty Programs

Today's consumers are more connected than ever before. People rely heavily on their smartphones and tablets to complete everyday tasks, meaning they rarely leave home without these technologies. But using mobile devices isn't as simple as just purchasing the hardware: Individuals must also select a wireless carrier.

Considering the fact that so many Americans are making these choices, it would seem that loyalty programs would be a natural fit for wireless companies. Using these marketing solutions, businesses in this space could greatly boost customer retention, the frequency of word of mouth referrals and more. However, loyalty programs remain underutilized in the wireless sphere, meaning companies that buck this trend will stand out from the competition and cultivate more passionate customer bases that take advantage of upgrades, sign new contracts and perform other highly beneficial actions.

Providing the right added value
According to Loyalty360, it can be particularly challenging for wireless carriers to inspire loyalty and thus minimize churn rates. The source cited the recent WDS 2013 Mobile Loyalty Audit, which found 36 percent of American wireless customers are thinking about leaving their current service provider within the next 12 months, and a mere 13 percent asserted they wouldn't switch even if a competitor was offering a better price or service. Additionally, 23 percent of customers who are seen as at "switch-risk" were revealed to be highly satisfied with their mobile operator.

These findings indicate that wireless companies have some complex problems to solve. While they need to address churn rates and enhance the customer experience, they must also pinpoint where things are going wrong. Tim Deluca-Smith, vice president of marketing for WDS, told Loyalty360 one issue is that wireless companies are falling short of creating the added-value and sense of reward that people desire. In fact, 40 percent of at-risk customers admitted that they don't feel valued and aren't rewarded.

Plus, the wireless industry faces unique challenges when it comes to differentiation. Erin Raese, president of Loyalty360, explained that while it was once too expensive to switch between providers, the process is now relatively simple and affordable. Because of this, mobile device users are increasingly driven to follow the technology they want. Raese noted that when AT&T was the only company with the iPhone, many customers signed up just to get the gadget they wanted. However, Raese stressed that featuring the most cutting-edge devices is no substitute for strong loyalty programs.

"People can now easily move to the company that's offering the latest technology, the best deal, etc.," said Raese. "Organizations can't hang their hat on being the company that always has the latest and the greatest. The competition will get ahead at least a few times, and if your company is only focusing on the newest thing, you'll miss a good deal of what's happening here and now – like building a real relationship with your customer."

To this end, Deluca-Smith emphasized that if mobile operators can offer "really valuable loyalty programs," they may be able to keep their customers engaged over the long term. These initiatives should include targeted loyalty rewards that take each person's buying behavior into account. Using their knowledge of a customer's personality and purchase tendencies, wireless carriers can choose the right offers to promote and the value-added services that will be most attractive to the customer.

In a separate article for Loyalty360, TIBCO Loyalty Lab stated that loyalty programs are especially effective in industries that tend to experience high levels of customer turnover because these efforts help with differentiation. The source said that strong customer retention rates are advantageous to have, as the benefits relating to maintaining relationships can outweigh those that come with acquiring new ones.

By effectively leveraging loyalty rewards, wireless carriers can lower their customer churn rates and create the enthusiastic client bases they desire. Taking a targeted, innovative approach to engendering loyalty is sure to have a measurable impact on results.