Carriers expand loyalty efforts with a new wave of rewards programs

June 23, 2016
5 min read

With smartphone usage now ubiquitous, there’s little wiggle room for subscriber growth within the wireless sector. As the industry has become saturated, carriers have used competitive pricing and special offers to try and steal customers away from their competitors. At the same time, carriers have started working harder to hold onto their existing customers. As each carrier works harder to protect its customer base from competitors’ flashy switching offers, we’re seeing a new wave of loyalty programs emerging from the industry. With any luck, these new programs will enable carriers to thank customers, engage them, and hopefully keep them satisfied and sticky.

81% of the US population uses a smartphone

Loyalty programs aren’t new in the mobile industry. Just look at AT&T’s Plenti, a joint program with partners such as Macy’s, RiteAid, and Exxon Mobile, allowing participants to earn and redeem points across participating brands. Or Verizon’s Smart Rewards Program, which enables customers to use points in online auctions or to get discounts off of various purchases. But the new rewards programs, led by T-Mobile, are upping the ante.

Last week, T-Mobile announced a series of efforts to thank its customers for contributing to its success. These include a weekly round of freebies given to customers every Tuesday; a free share of company stock for each primary account holder (with the opportunity to earn more with each customer referral); and an hour of free WiFi on every GoGo-enabled flight. The first round of Tuesday freebies included free Wendy’s Frosties, Domino’s pizza, and tickets to Warcraft—not shabby gifts. Plus, who ever heard of a company giving away stock (valued at $42 per share at the time of writing) to its customers? There’s no question that T-Mobile’s loyalty program is taking a different approach.

Perhaps as a result of rumors about T-Mobile’s new thank you program, which circulated many weeks ago, AT&T made a pre-emptive announcement about its own upcoming loyalty program, set to launch June 30. While still a bit sparse on details, AT&T’s program promises BOGO movie tickets from, pre-sale access to concerts and events, and special content for customers that also subscribe to DIRECTV service.

So, do loyalty rewards programs really work? Some do, some don’t. Interestingly, the wireless industry has seen several rewards programs fail in recent years. US Cellular announced last year that it would shutter its rewards program. Around the same time Rogers Canada closed up its First Rewards program. And Sprint trialed a program with its customers last fall, but it didn’t last long, and we haven’t heard a peep about it since. On the other hand, just look at the success that Sephora, Southwest Airlines, and Starbucks have had with loyalty programs, just to name a few. The successful programs have added enough value to keep customers re-engaging with the program over time.

One of the ways rewards programs add value is by meeting a customer’s needs or wants, or, in other words, being relevant. Relevance depends on knowing your customers and personalizing the program to each one. Mintel’s Retailer Loyalty Programs US 2015 found that three in four loyalty participants like it when programs offer rewards or deals based on previous purchases. A recent study produced in collaboration with Visa in Canada found that satisfaction with loyalty programs is 14 times higher when programs are highly personalized. The better brands are at incorporating relevant rewards into their loyalty programs, the greater impact they can have.

Rewards programs also add value by being easy to use—customers shouldn’t have to work for their gifts. With T-Mobile Tuesdays, the carrier asked its customers to download a free app, where they can easily access each week’s freebies. That app hit #1 in the Apple Store and #2 in the Play Store shortly after T-Mobile’s announcement, suggesting that the biggest hurdle (getting the app onto customers’ phones) is quickly being cleared—now the provider will have to sustain the initial excitement.

75% of consumers are more likely to be loyal to brands that show they value customers’ business

Ultimately, consumers want to be thanked for their business. According to Mintel report The Role of Loyalty in Financial Services, three in four consumers said that they were more likely to be loyal to brands that show they value customers’ business. The interest in marketing that expresses thanks cannot be underestimated. An analysis of email subject lines from Mintel ePerformance/eDataSource found that subject lines with the words “thank you” or “thanks” have generated consistently higher-than-average read rates, regardless of industry.

When a brand implements a rewards program, that program should be an extension of an overall culture of thanks, rather than a tacked on offering to ameliorate high churn rates. A poorly designed rewards program will seem gimmicky, arduous, or irrelevant, and will not come across as a “thank you” – and without that “thank you” piece front and center, there’s a good chance that the program will fail. But through characteristics such as personalization, ease-of-use, and genuine thanks, rewards programs can become a valuable component of a brand’s overall loyalty strategy.

Emily Groch is Mintel Comperemedia’s Director of Insights, Telecommunications. She provides omni-channel marketing analysis and competitive insights to wireless, TV, internet, over-the-top, and home security service providers across the US and Canada.

Emily Groch
Emily Groch

Emily Groch is Mintel Comperemedia’s Director of Insights, Telecommunications, providing omni-channel marketing analysis and competitive insights to telecom providers.

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