Thought leadership

The change in switching supplier rules stipulated by the industry regulator, Ofcom, which came into effect earlier this year, means that customers now have the opportunity to switch their telecoms provider within 30 days from receiving notice of changes to their current contract. This could include a reduction in free minutes or increased contract prices. Applicable to mobile phone, landline or broadband providers, customers can now avoid being penalised for moving for competitive rates.

 Why then, armed with this information – along with the fact that the cost of customer acquisition is five times[1]  greater than keeping an existing customer happy – is the telecoms industry not focusing on its customer retention strategy rather than acquisition, and placing the focus back to those loyal to the brand?


Telecoms companies must take notice of the growing competition in this market and how easy it is now to have a loyal customer one minute and risk losing them the next. Research shows the potential of selling new products to existing customers sits at 60-70 per cent[2], compared with only 5-20 per cent with a new prospect, highlighting that existing customers simply cannot be ignored.


With recent reports of price increases to customer phone bills, telecoms providers face judgement both from existing and potential customers. In an attempt to maintain customer faith and attract new ones, providers such as Vodafone offer existing customers desirable incentives to stay put. With Vodafone Freebee Rewardz, customers are given the choice to ‘grab’ an instant reward or to ‘grow’ their points balance for something bigger and better. It offers customers a desirable, instant and ongoing reward. However, in light of the recent price hikes, what strategies are other providers considering to keep their loyal following jumping ship?


The majority of customer retention strategies are driven by reactionary panic. However, understanding the issues your current customers are facing and going the extra mile to maintain their trust in you is paramount. Here are my five key principles in executing an effective customer retention strategy for your organisation:


1. Ease of redemption

Rewards must be quick and easy to redeem, without any high level of effort on behalf of the customer. Vodafone Freebee Rewardz is a prime example, by offering customers lifestyle rewards and point based loyalty schemes, it is making the incentive easy to redeem, with the financial benefits instantly available for customers to see.


2. Reward choice

There is no optimal number of rewards that should be offered, as this varies on a programme by programme basis and is driven by factors including the spread of customer demographics, budget and programme objectives. New rewards can be trialled on a tactical basis to assess impact on customer behaviour and the most important thing is to remember they must be relevant to the audience and something they really do want.


3. Maintain excitement

Customers tend to get used to loyalty programmes quickly, so it is important that a reward scheme does not become too familiar. Customers can also, over time, begin to view loyalty rewards as an entitlement rather than a gift.  This can be avoided by regularly refreshing or enhancing a programme so that there is always something new to please and engage the customer.


4. Surprise and delight

Providing a reward that a customer isn’t expecting can be a very powerful tool. By giving customers an incentive to win as they spend, the perceived value and memorability of the provider is amplified, like with the Vodafone Rewardz scheme.


5. Communication and engagement

Effective communication is the key to the success of any loyalty programme. It is important to ensure customers understand the initiative and value of what they are being offered. Points statements, reward reminder emails and programme enhancement updates are simple and effective ways to drive customer engagement and cementing the ongoing bond with the brand.


[1] Lee Resource Inc, 2010

[1] Marketing Metrics, 2012


Ian Horsham is  Divisional Director, Promotions and Incentives, Grass Roots Group

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