Loyalty programs have long been held as key to indirect monetization for the communications service provider. Upcoming research from Ovum has verified that notion – loyalty schemes improve Net Promoter Scores (NPS – a measure of brand perception) and can help improve churn. If you do not have a loyalty program, you had better rethink. Even MVNOs offer basic loyalty incentives. But the benefit of a great loyalty scheme goes beyond churn management – it can also lead to net additions growth with the operator poaching customers from its competitors, and it can even earn revenues for the operator.
New evidence that loyalty is not only good for churn
In a new report, Key Telco Loyalty Programs Make Their Mark, we profile six CSP loyalty programs from operators AIS (Thailand), HKT (Hong Kong), O2 (UK), Telstra (Australia), T-Mobile (US), and KDDI (Japan). Improved NPS is commonly connected to loyalty, with some operators attributing loyalty to lower churn. But three loyalty programs were standouts, in part because of their maturity, as well as their KPIs. The first is O2's Priority in the UK. For O2, loyalty is part of the overall brand strategy, and as such, it attracts net additions; it doesn't just help with churn. AIS's 14-year-old loyalty program, Serenade, is a key differentiator, boosts NPS, and attracts consumers from competitors. Meanwhile, HKT's The Club, a points-based loyalty program, is generating revenues for HKT and has its own P&L after only three years in the market.
Loyalty programs do not have to be highly sophisticated
Loyalty programs are often the unsung heroes of a CSP's brand perception story. But they should not be. Loyalty programs that are done right have impressive benefits for operators, including incremental revenue generation. Not every operator has to make a major investment in a standalone loyalty program. Our report includes a range in sophistication of loyalty schemes – from one that is gift-based to others that are points-based and tiered (e.g., Gold, Silver, Bronze inclusions). Others include coupons, concierge services, dedicated lounges, and financial services, while one operator has made investments in platforms and verticals to support the loyalty program. The point is that all show successes, regardless of their sophistication. Each individual CSP can pick and choose its own loyalty building blocks, based on its resources (financial position and existing assets), and of course, it will need the underlying billing systems in place to support such programs.
Key Telco Loyalty Programs Make Their Mark, CES005-000009 (to be published in March 2018)
Digital Consumer Insights: Multiplay and the Mobile-Only Consumer, CES005-000007 (February 2018)
Nicole McCormick, Practice Leader, Broadband and Multiplay