Over the past year, Verizon, AT&T, and T-Mobile have each launched rewards programs. The most recent entry is T-Mobile Tuesdays, an app where T-Mobile customers are given freebies every week, such as a Domino’s Pizza or a Wendy’s Frosty (John, how about some lower-cal options?) and customers can enter to win more substantial prizes. Verizon offers Smart Rewards — customers earn points that can be redeemed for savings on merchandise. AT&T joined an existing rewards program called Plenti, where customers can accumulate points for savings at Plenti partners such as Exxon, Macy’s and Rite Aid. AT&T also introduced AT&T Thanks last week (curious timing), which offers discounts on movie tickets, Live Nation Priority Pre-sale seats, and some unique content for DirecTV customers.
The wireless industry has never had a successful loyalty program. I would argue the current offerings are largely rewards programs and giveaways, not loyalty programs. Smart Rewards and Plenti are basically discount programs where customers have to buy something in order to save, say, 10% on a gift card or a gallon of gas. Of course, this is what T-Mobile CEO John Legere poked at when he introduced T-Mobile Tuesdays, which is more of a giveaway program than a rewards program. In typical ‘Uncarrier’ fashion, TMO Tuesdays is more innovative, edgy, and fun (and a tad gimmicky) than the Verizon and AT&T programs.
Let’s be honest: how many of you Verizon and AT&T customers really use Plenti or Smart Rewards, much less know about them? And do these programs make you loyal in any way to your carrier? T-Mobile’s program might have a bit of an edge in that customers might enjoy entering the weekly sweepstakes for what look like some really fun prizes and trips. I see this as more part of a package of items that make T-Mobile distinct, such as free international roaming and BingeOn, than a loyalty program in and of itself.
It is interesting to me that wireless carriers have never had a true loyalty program, in the vein of airlines, hotels, and some retailers. The average wireless customer spends some $600-800 annually on wireless services and a household can easily spend $2,000 per year. This is a competitive industry, where the name of the game is taking customers from another operator. Reducing churn (or, keeping customers) is a huge priority for the operators. Lowering churn by 10 or 20 basis points has billions of dollars in impact to a large operator. Isn’t it curious operators rarely proactively reward customers for their loyalty or tenure — “thank you for being a customer for five years – we’d like to offer you some free data or a discount on your next device purchase”?
In order to attract or keep customers in this highly competitive industry, I think the operators should consider offering a real loyalty program. What might this look like? It would be more focused on incentives to stay and expand a relationship with a service provider. Points could be accumulated for any of the following:
• Tenure (years of service) with the carrier
• Number of devices attached to plan – good incentives to add a tablet, car, etc.
• Adding a family member to a group plan
• Referring a friend
Points, or rewards, could be used for things such as:
• free data
• a discount off a monthly plan
• dollars toward a new device or accessory purchase
• free apps and content
Importantly, this would be a reward for loyalty and spending. For example, how about one GB per month added to your plan for every year of service? The other aspect of this is the program creates positive additional touch points with the customer, whether in the store, online, or through an app. This type of plan is much closer to what airlines, hotels, credit cards, and some retailers offer: “You’re going to fly or stay in a hotel and we would like you to do it with us”.
This could also be an opportunity to offer something differentiated in the small business segment. None of the operators has really nailed an effective small business program. This would be a nice incentive for a business of, say, 5-20 lines to incentivize its employees to select a particular service provider.
I think an effective loyalty program could make a difference in customer retention. It would be interesting to see one of the carriers try it.