Driving Brand Loyalty
What it Takes to Keep Customers
Given the intense competition in the wireless industry and scant new growth, loyalty and customer retention are major problems for postpaid and prepaid service providers, both traditional and MVNOs. Keeping your customers happy requires knowledge of your market and staying on top of what the competition is doing. So let’s see what’s happening in prepaid.
Ike Denvers, a prepaid wireless dealer in Hawaii, pointed out that while mobile phone users become quite attached to their devices, they are not very loyal to their service providers. He thinks that traditional prepaid, which has gone mainstream, is inherently disloyal. About one-quarter of subscribers have signed up for prepaid, Denvers said.
“Postpaid month to month plans are looking more and more like prepaid,” said Denvers. “The edges are blurry between prepaid and postpaid.”
Carriers like T-Mobile have contributed to this industry transformation. The company has made a standout name for itself as the “Uncarrier” brand, changing the telecommunications paradigm by giving customers contract-free agreements and paying customers’ early termination fees if they break up with their existing carriers. John Legere, the company’s CEO, has been hyper-active in creating a social presence to promote T-Mobile’s image.
“Every market is different, but prepaid is a fully saturated market, so it's a matter of moving people from one company to another one,” said Denvers. “It's an overall problem in wireless and the major prepaid carriers are launching price wars.”
The marketing strategy is primarily on price but the problem is what’s offered to new customers is not always available to existing customers. “Boost Mobile will come up with a great deal for new customers, but they won't give it to existing customers,” Denvers said. “When old customers aren’t getting the sweet deal, the loyalty approach is at cross purpose.”
If a brand wants to build customer loyalty, it should cover everyone when there’s a new deal. The other road to building loyalty is through quality customer service. Some customers are only looking for price, but others want great service, such as excellent coverage, chat support and emails.
Price versus Customer Service
Robert S., a resident in rural Vermont, was using Republic Wireless, and he admitted the reason was the cheap price. He knew that service, which passes calls from Wi-Fi to cell and back, was variable, sometimes sketchy in his location. Other customers who focus on price are likely to go with a big well-known prepaid wireless company like TracFone. A leader in prepaid, TracFone makes its money on volume, and it doesn’t have to be that concerned about churn rate.
Denvers estimated that TracFone's churn rate is currently about 2-3 percent a year, which works out to 2-3 million people a year who will at some point be out there looking for new plans.
Quality customer service costs more, but that's what some customers want above all else. Those people might be subscribers of AirVoice (an AT&T MVNO), which has a reputation for high quality customer service, according to Denver's experience and many reviewers. He also likes PTel, an established MVNO since 2001.
Smaller MVNOs, like Red Pocket and H20, have to compete with good service standards set by more established companies. Independent dealers (mom and pop stores) usually want to build relationships with customers. They achieve this by providing great customer service, generally US based, and sweet deals, according to Denvers.
Brand level carriers like Boost, Virgin Mobile, Cricket and TracFone are more like prepaid divisions of the Big 4. Denver said that they create an “artificial loyalty,” then lock people in and essentially, create a monopoly. Many providers in the prepaid business are against the monopolization of MVNOs.
“The big guys get the best spectrum and create their own rules,” Denvers said. An example of the monopolization trend is TracFone acquiring Simple Mobile and Page Plus. “It is hard for independent prepaid companies to compete,” added Denvers, who predicts that in five years, TracFone will monopolize the industry.
Churn is the Prepaid Achilles Tendon
Churn is the frequency in which a prepaid customer decides to leave a service to try a competitor. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle.
With so many offers in prepaid calling, customers are fickle and frequently tempted to switch providers. Customer retention is an ongoing challenge that can be met by using certain features within a platform. Carrie Fedders, sales manager, IPsmarx USA, provided us with some examples:
Bonus Points – this application enables your marketing team to define a point system to encourage customer loyalty. For example, they may define that for every $100 spent, customers can receive 5 bonus points that can be redeemed for free minutes, similar to frequent flier miles.
Referral Program Management – To encourage customer referrals, this application allows you to reward your customers for referring friends to sign up for this service. Customers who refer friends are eligible to receive a predetermined number of bonus points that they may redeem for your products and services.
Message Board – Your marketing team can easily display messages in various customer groups on the customer web portal, making it easy for customers to find out about the latest news and promotions.
Promotion Discount Tool – In conjunction with the IPsmarx E-store, this tool allows you to create competitive ways to position your services, while adding value to your customer’s purchase and driving your online sales. Using this tool, you can create a coupon or a discount equivalent to a dollar value or percentage and assign the coupon or discount to the online services you would like to offer to your customers.
Other features of the IPsmarx platform include SMS Marketing, Gift Card Solution, and Auto Recharge so end users continuously top up their accounts automatically each month, as well as “refer a friend” with the mobile app.
Fedders said that the biggest driver of customer retention in the VoIP and Prepaid Calling industry is QoS (Quality of Service). “People who are making a lot of international calls want good quality and if they find a provider that can offer that, they are much more likely to continue using them, even if prices are higher than the competition.”
In summary, a loyalty program is an incentive plan for customers, and it also allows a business to gather data about its customers so you know what they want and like.
Nate Moshkovich, executive vice president, ClearLine Mobile, suggested: Before considering loyalty programs, evaluate your key business elements, what McDonald’s calls QSVC: Quality, Service, Value, and Cleanliness. “For the prepaid industry, the “C” should stand for Convenience (how easy it is to buy a product, instore or online). “Until those four elements are in good shape, it’s probably best to postpone the launch of a loyalty program.”
Moshkovich advises clients to offer product discounts, coupons, and points toward merchandise or some other reward in exchange for their voluntary participation in the program.