The eye of the storm for telecoms: can increased marketing spend save the day?

It should come as no surprise to anyone in the telecommunication industry that customer service is crucial for increasing engagement.

But however simple and obvious that statement seems, achieving excellent, even outstanding, customer service is more involved that it might first appear, not least because telecommunications is such a challenging sector.

Why? Because on the one hand, digital innovation is continuous, requiring telecommunication companies to constantly innovate to improve the technologies available to users – and to stay ahead of the competition. On the other, customer expectations are constantly rising, setting ever higher standards for quality, requiring companies to be able to proactively address those challenges.

New competition from OTT (over the top) services that offer digital content and services directly through the internet with new freemium models have placed many traditional telcos in crisis when it comes to acquiring new users. So how can companies embrace the challenges to restart the sector?

Social workers can play their part

In this regard, changes are needed that involve various aspects, from transforming the core business, to regulatory interventions that are able to reconcile market evolutions with fair competition. In addition, an important element is the ability of telecommunications companies to create a marketing strategy that is able to effectively exploit all the tools that digital transformation provides.

Social platforms play a key role in this respect. They’re a fundamental component of any effective digital marketing strategy, but especially for companies in the highly competitive telecoms sector, because they feed into three key aspects of competitive advantage: customer retention, company reputation and brand identity.

An article in the International Journal of Innovative Research and Development considers the positive influence of social media marketing on the market performance of telecommunication companies and provides an interesting perspective. Although it focuses mainly on the situation in Africa, most of the conclusions are applicable in any geographical and economic context. In particular, the study points out that telco companies who have invested in IT and in digital development have factored in social channels as a big part of their marketing strategy.

This is for one very good reason: because social media has an enormous capacity to engage users. And engagement is a key component both for retaining existing customers and for reaching and acquiring new potential customers.

The benefits of high retention

No-one would deny that retention is a key aspect of building a financially sustainable business. This is all the more true for companies in the telecommunications sector where the degree of user volatility is high and where company reputations are somewhat fragile. Suffice it to say that, in general, companies in the finance sector often have a better reputation than those offering telecommunications services!

It's certainly the case that retaining existing customers is less expensive than acquiring new ones. According to research, acquiring new customers can be up to five times more expensive than maintaining your existing customer base. And a study by Frederick Reichheld for Bain & Company found that a 5% or more increase in the retention rate can lead to a 25% or more increase in profits.

Conversely, if you can reduce the number of customers lost by as little as 5%, you can expect profitability to increase from 25% to 125%. On top of that, a 2% increase in retention corresponds to a cost reduction of about 10%. The increased profitability described above is linked to an aspect that represents an additional benefit of retention, namely that a more loyal and involved customer tends to buy 90% more frequently than a customer who does not feel involved with your company. In addition, a loyal customer tends to buy from the same brand and spend more than 60% on a single transaction, thus guaranteeing a unit profitability 23% higher than the average customer.

Incidentally, increasing the degree of retention can also help telco companies stand out from the competition. Today, consumers are subject to endless streams of marketing messages, of which only a low percentage will actually catch their attention and interest enough to be effective. For this reason, we need to be able to increase the number of loyal customers and this includes creating content that supports a high degree of consumer engagement, content that can be perceived as relevant and valuable to create a special ’connection’ with consumers. Social platforms are useful tools to achieve this.

Between saying and doing is engagement

So how can you actually create loyalty with your customers and thus increase your ability to keep them connected to you? While it’s easy to list all the benefits of retention, it’s less straightforward to actually achieve it. Remember, retention and engagement often go together. And if this is true, the place where you can create engagement par excellence is on social networks.

Italian telcos have understood this connection by activating social channels such as Facebook and Instagram, according to a study published in the Journal of Open Innovation: Technology, Market, and Complexity, which analysed the role of social media in promoting the so-called ’customer involvement for service innovation’.

In particular, Telecom Italia and Vodafone have created different types of entertainment activities suitable for social media to connect with customers. For example, they use Facebook to pose lifestyle questions to users in order to strengthen the ’one to one’ relationship between company and consumer, and consequently increase brand attachment.

Social media channels are not just a powerful touchpoint to help telecommunications companies reach possible customers with their marketing materials, they are also an important tool to improve the business. Vodafone, for example, has entered into a collaboration with Crowdtech to develop a Panel Community open to users where it collects information about how customers feel about various topics. Similarly, Tim has developed a User Experience Lab, a platform where users are asked to provide ideas for new services or to preview new products.

By involving customers, companies have access to a considerable amount of data and information that would otherwise be very difficult to obtain. They can then use this information to improve their products.

All in all, it’s clear that telcos must prioritise their social media strategy, introducing regular, considered and innovative use of social platforms into their marketing culture in order to nurture and retain that most valuable of assets: their existing customers.

Retaining customers with excellent service

Customer experience is absolutely paramount as a differentiator for telecoms whether in the sales process or the retention stage. In a noisy digital marketplace, savvy customers can easily and quickly shop around to get the best deals, which makes brand loyalty and revenues from renewals increasingly hard to achieve.

Building relationships with customers is key, and the best relationships are built on deep knowledge and understanding. Digital technology and analytics are key to this , not only can you keep your customers happy, but it’s possible to predict their behaviours. Indeed, our customer experience team can foresee trends that may impact customer wants, needs or pain points by gathering insights from customer interactions.

We can help you build a proactive retention strategy that determines the next best action for each customer profile – even before a customer is considering their next course of action. By personalising offers, creating tailored packages and demonstrating value to customers, you can improve brand advocacy, increase the likelihood of a customer to renew, and create opportunities to up- and cross sell.