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This week's guest contributor:
Adhish Kulkarni, Head of Telecoms Loyalty and Product Solutions

‘Loyalty’ in its various forms and definitions is firmly back on the Telco agenda, using marketing budgets to drive mobile Loyalty and CRM campaigns.

A new study commissioned by Buongiorno, examines consumer attitudes toward churn and mobile loyalty programmes. The research, conducted by Analysys Mason and Buongiorno on consumers in both developed and emerging markets, highlights five key areas to think about for those considering implementing a mobile loyalty scheme.

There is a clear opportunity for reward programmes to gain greater traction and impact behaviour as despite being familiar with the idea, most mobile subscribers are not yet part of an operator led reward programme

Consumers are familiar with the concept of rewarding loyalty, in the UK, 73% of people are members of at least one loyalty scheme. New schemes should consider the general level of market understanding and manage customer’s expectations to avoid a mismatch and dissatisfaction. The challenge is to align incentives to customer expectations and ensure customers are aware of the campaigns.

Target the right customers, understand why your customers churn and target loyalty schemes accordingly

Effective loyalty schemes aim to retain consumers who have the likeliest propensity to churn- identified as younger subscribers and new customers, with the first 2 years being the “danger zone”. Contract subscribers with higher ARPUs, and higher activity, are also likely candidates for churn, those who spend EUR30–50 per month are most likely to change network (16–17% of respondents).

The intention to change network is about the same for both contract and prepaid users (12% and 10%, respectively) while 20% of contract users want to stay with their existing provider, but change package

Don’t assume that the same incentives and scheme structures will work equally well across all markets and subscriber segments

Getting it right is not straightforward, what consumers say they want may vary from what they actually do when it comes to redeeming rewards. Overall, subscribers rank schemes that offer occasional high-value gifts as most appealing (76% prepaid, 71% contract), collecting points is a favourite scheme everywhere, subscribers vary in how they wish to use these. Points for a guaranteed prize (e.g. free/ subsidised handset after 12 months) were by far the most popular overall (nearly 50%).

Experience incentives and points-based incentives were rated more highly by contract subscribers (58% and 71% respectively) than by prepaid (52% and 63% respectively). The two groups showed equal preference for free offers or discounts in shops.

Instant win type incentives for top up/bill pay are clearly more appealing to emerging market subscribers and Nigerians in particular prefer saving up points for a more “lottery” type major prize opportunity.

Reward schemes, when done right, have the desired impact on subscriber behaviour – reducing churn in developed markets, increasing spend in emerging ones

The research indicates reward programmes are having more of an impact on churn than on driving spend or adoption of new services in developed markets, while in emerging markets loyalty impacts on increasing spend. In growth markets such as Nigeria, The majority of users (58%) have multiple SIMs and spend can more easily be shifted to the operator with the best rewards.

Designing the loyalty programme is critical. Done right, it can generate powerful behavioural change while done wrong, it can damage the brand for the long term.

The experience from Nigeria where operators have been aggressively launching promotions shows that a bad scheme can be worse than no scheme and the campaigns seem certain to have damaged the brands involved.

However in Buongiorno’s experience, when done right, partners typically see gross revenues increase between 4% and 9%. Since 2004 Buongiorno has been implementing a variety of programmes across the world. With 12 programmes running currently, Buongiorno has a wealth of experience in both tenure based programmes like Orange Wednesdays, points based programmes such as MTS Bonus in Russia, and ARPU driving programmes such as Top Up Surprises for O2, Optus, TIM Italy and others. 

Matteo Montan

Head of New Business