To call the US wireless industry highly competitive is putting it mildly. Increased price competition and incentives for switchers has intensified pressure on providers to hang onto existing customers, who are more likely than ever to be enticed away. Sprint and T-Mobile, for example, promise to cover the costs of early termination fees and even device installment balances to help consumers switch from another provider. These efforts have no doubt contributed to the higher churn rates observed across the industry, with all four major US wireless carriers exhibiting a year-over-year increase in customer churn in Q4 2014.
Also contributing to churn is the culture of mistrust bred by the wireless industry. Nearly 25% of consumers say that they consider themselves loyal to their wireless carrier. Perhaps even more striking, only 15% of consumers say they trust the information posted on wireless carriers’ websites, and just 13% say they trust in-store representatives (Mobile Network Providers – US 2015). Complex pricing structures, various offer stipulations, overage charges, and steep fees to break a contract likely contribute to this general wariness toward wireless carriers. As carriers have watched their customers switch to other providers, many of them have begun to implement new loyalty offers and strategies in an effort to build trust and boost retention.
T-Mobile has been addressing the issue of consumer distrust toward the wireless industry over the past two years with its “Un-carrier” movement. The company systematically seeks out consumer complaints and addresses each point of frustration. One of T-Mobile’s recent Un-carrier initiatives, Data Stash, enables its customers to roll over unused data to the next month (to which AT&T responded with its own Rollover Data offering). Previous Un-carrier initiatives included the elimination of contracts, early upgrades, and free global data. Additionally, T-Mobile has rewarded customers with excellent payment history, but poor credit, by promising them the same deals offered to good credit customers. T-Mobile alerts its customers of the Un-carrier initiatives via SMS or email. These serve as recurring reminders that T-Mobile is not the typical wireless carrier, and helps reinforce the perception that the carrier is putting its customer first.
Both T-Mobile and Sprint have been using their CEOs to speak directly to customers. For example, T-Mobile CEO John Legere is highly active and approachable on social media. Here, he interacts with customers and other consumers on a regular basis. He has positioned himself as a kind of “everyman,” and uses this persona to extend the image of the brand as one aligned with, rather than against, consumers.
Sprint has also been putting its CEO at the forefront of its marketing efforts. After a full quarter of offers aimed squarely at prospects in Q3 2014, Sprint followed up with a full-scale effort to reward its existing customers. The company has been sending letters and emails promising loyalty rewards from CEO Marcelo Claure. Emails with the subject line, “Our new CEO wants to reward your loyalty,” had an exceptionally high average read rate of 56% (eData Source). Additionally, some of the physical letters were sent to customers via FedEx Express, showing a high level of investment from Sprint. Loyalty rewards included unlimited talk, a $15/month discount on its iPhone 6 leasing program, and 12 months of free service for customers who add a line.
Sprint has featured Claure as an executive who is in touch with the consumer, specifically, the Hispanic consumer. This messaging has been communicated through acquisition efforts, as well as customer communications. For example, recent customer e-newsletters featured the subject line, “Meet the Latino President who created real value,” or, for the Spanish version, “Conoce al presidente latino detrás de los ahorros.” The first section of the email included a brief description of Claure’s commitment to simplifying the wireless industry and providing the best value, as well as a link to a video in which Claure discusses the industry.
Loyalty discounts have also been observed from other wireless providers, including Verizon which offered loyalty discounts to some on-contract customers who are upgrade eligible (although these discounts are primarily used to encourage customers to switch to a device installment plan when they upgrade). Additionally, Verizon and its competitors have all been observed to encourage existing customers to take advantage of new pricing or data allotments available to them as a result of new pricing structures (which are being frequently rolled out).
In today’s volatile marketplace, where competition makes it easy for unsatisfied customers to switch, loyalty efforts are more important than ever. Wireless carriers are challenged to keep their promises of network quality, value, and concern for the customer. Loyalty programs must be truly rewarding for customers, and not merely veiled efforts for the provider to gain something from the customer. Additionally, the personality of all interactions, whether on social media, via direct marketing, on the phone, or in person, will need to be consistent and rewarding for the customer, if trust is to be gained. Having a holistic brand image founded on customer service and extending from marketing efforts to personnel could not be more critical than it is in the current marketplace.
