The mobile phone market is highly competitive, but how does TelefÃ³nica UK Limited, which has brands such as O2 UK, Priority, O2 WiFi, build customer loyalty? James Reddington, Head of Consumer Loyalty & Rewards explains.
Think about your average pay and go consumer. They're the epitome of a non-committal customer in a competitive market. They haven't bought into a deal, they use the product when they want, and can ditch it at any time. So how do you keep them loyal?Â That's the challenge for O2 in the UK, and it's solving this by differentiating itself.
"For me it's important to build functional loyalty but more important to also develop and build emotional loyalty and create fans," said James.
To do this, TelefÃ³nica UK has started to put the emphasis on ensuring loyal and existing customers feel rewarded for being with O2.
"There's a perception in the market that new customers are treated better than existing customers," explained James. "We have to work really hard to reiterate that's not true and demonstrate to our existing customers that they are the most important."
Some of the ways TelefÃ³nica does this include ensuring that existing customers always get the same or even a better deal than new customers. It's trying to change the mind-set of the customer when they need to buy a new phone or renew their current contract.
"We're trying to take away a behavioural instinct that says âI am looking for a new mobile and I am going to shop around for where the best deal is on the high street rather than to contact their existing supplier."
The mobile phone sector is also highly digital with many customers interacting online. James says that a consistently good customer experience through all of O2's touch points is crucial for building and maintaining loyalty, including a good online user experience. This includes thanking customers throughout their lifecycle for their custom, for example sending them a text to say thanks when they upgrade or they have been with the company for another year.
"Over the last few years rewarding customers' loyalty has played a key role in both retaining and acquiring customers and this trend is expected to continue. For me, the trick is doing it through being human and acknowledging customers for their custom and making them feel valued and that little bit more special."
One of the ways the company acknowledges customers is through social media. Even its CEO has a Twitter handle. Like most companies, it uses social media to communicate with customers rather than sell.
An example of a programme that has gone well for TelefÃ³nica UK is the O2 Rewards scheme set up for customers of O2 Pay & Go. It works by giving back customers up to 10% of their top up value, which can be redeemed every quarter. The rewards can be used for extra credit or saved up for money off tickets to must-see gigs, a new mobile or high street vouchers. Customers can also manage them online 24/7 at o2.co.uk/rewards.
"It works because it gives customers flexibility and the rewards are relevant," said James. "They recognise the value they get back."
More than half of O2 Pay & Go customers have opted into the scheme and redemption is over 80% every quarter. "It's one of our most engaged programmes."
It works for the company because customers are engaged and using it. James says that the programme's customers are less likely to churn and those who are part of the scheme actually spend more on top ups. In addition, they also have higher levels of customer satisfaction. "They see their loyalty rewarded."
TelefÃ³nica will be at this year's Europe's Customer Festival with its Head of mCommerce Product Development & Strategy, Nathan Cushnie, delivering a Fishbowl Workshop on mobile wallets and how you can get the most out of this completely emerging technology.
You can also get a great run down of this and other interviews and case studies, including Aimia’s Jan-Pieter Lips, in Total Customer’s completely free Little Book of Loyalty.