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Loyalty Management: Telecom

The telecom sector is a rapidly growing industry worldwide. The introduction of advanced technologies and stiff market competition has made the telecom sector a much more challenging industry. Telecom companies have started understanding the fact that maintaining customer loyalty has a very important role for increasing revenue.

Consider the following facts:

  • Acquiring a new telecom customer is six times more costly than retaining an existing customer.
  • Customer churn among mobile operators have been as high as 30%. An entire customer base can switch between competitors in just over three years.
  • The breakeven time of mobile operators for a new subscriber can be as long as one year.

Some of the solutions offered by Loyalty Square include:

Behavioral Segmentation: The major challenge for the operator is to recognize the preferences of its customers and then to effectively offer the products and services that enhance customer loyalty. With information like product usage, buying pattern, decision attributes and customer attitude, effective Behavioral Segments can be developed that divides the customer base into groups based on the way they respond to promotions, price changes, channels they use to communicate, etc. This segmentation should be done separately for prepaid and postpaid customers.

It’s a good idea to study the profitability, growth and churn within each segment. Based on this, the business should decide which segment to go after and how to differentiate them with a unique value proposition. There would be segments that may require quick fix offers to keep them engaged, others may need to have better service levels and so on. The segmentation exercise also helps business to take decisions on future investment strategy. Customer segments data overlaid with network usage data can help in determining demands, trends and patterns in network usage.

Behavior Scorecards: Loyalty Square’s unique model development capability, provides incremental lift in sales or revenue. These scorecards can be used to identify customer with higher propensity to response, activation, renewal or churn. Loyalty Square team has extensive capability in statistical techniques and machine learning algorithms.  

Customer Lifetime Value: Not all customers are equally profitable, nor do they all have the potential to become our most profitable customers. Loyalty Square has requisite expertise in developing Customer Lifetime Value analysis to identify customers with different level of profitability. This helps in implementing differentiated targeted strategies for customers at different profitability matrix.

Cross-sell Analytics: If you want to increase value of your customer relationships, drive product penetration, increase the revenue per customer and thereby profitability, Loyalty Square's solutions will provide all the technology and analytic services required to deliver smarter and more actionable marketing decisions, allowing you to execute cross-sell and up-sell programs.

Providers of mobile services are focusing on offering personalizing features (ring-tones, back-tones, video tones, online games, MMS, online music, etc.) sometimes as loyalty rewards, particularly to teen and young adult customers, in a way to retain their clients. Apart from that, mobile operators are looking for other ways to reward customers just for being ongoing customers: specific membership clubs, gift certificates, merchandising items, statement credit, subsidized handsets or service upgrades from the provider, are some the strategies implemented by the providers to stimulate fidelity among their customers.

Understand Drivers of Churn: Broadly, there are two main reasons for customer defecting from the telecom operators:

  • Pricing
  • Service Levels

It’s imperative to determine drivers of churn based on customer’s plan, usage patterns and their interaction with call/service centers. Loyalty Square’s approach includes analyzing call center notes to determine customer complaints.

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