Why Mobile Carriers Need Loyalty Programs

In Customer Experience, Featured on App, Loyalty & CRM by Kevin Kelly

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Mobile service providers have weak loyalty programs that desperately need big data to improve customer retention.

“New Samsung Galaxy S4 for free*”

So wouldn't it make sense to jump carriers every two years and get a fantastic phone basically free? On top of that, Verizon or AT&T might even throw in a great rate for your skyrocketing data usage. This is the tactic many of my friends use to get the phones they want at the prices they need—and note their loyalty thrives with makers of the phones like Apple, Samsung, and HTC and rarely the carriers themselves.

According to a recent study, the average cell phone user switches carriers every 48 months to take advantage of the low cost and benefits of signing on new contracts. Moreover, 60% of cell phone users don't think their carrier cares about them. The marketers themselves admit this: 65% of carrier marketers are not confident in their knowledge of their customers.

This is part of a larger problem: cell phone carriers really don't seem to care about customer loyalty. In fact, Verizon barely has a loyalty program and AT&T tried it and quickly killed it. Loyalty, for Verizon at least, lives in a very informal world where grandfathering and ambiguous phone-updating reign. This is because the very plans are muddled—with more and more customers demanding 4G at all times, carriers need to offset expensive infrastructure costs of building that data capacity. Under most current plans if you use more data you simply pay more. But where are the rewards for customers who do spend high amounts of money for gigs upon gigs each month?

The strange part is that the carriers already have extensive and personal information of all their customers but seemingly refuse to transform it into a dynamic loyalty program. Mobile service providers could gain a lot from talking with the loyalty professionals: airlines and hotels. Mobile carriers would benefit enormously from loyalty programs that keep their revenue within the company as data plans continue to blossom in the markets. In this way, Big Data wins again—especially for the construction of nuanced and effective loyalty programs.

John Bartold, Vice President of Loyalty Solutions at Epsilon will be hosting a roundtable "Loyalty on the move" that addresses these kinds of issues at Loyalty World USA in October.

“*with two year activation and contract.”

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