By Ari Banerjee, SVP Strategy, Netcracker Technology
As economic and other factors such as customer dissatisfaction, changing business demands and legacy technology lead to a slowdown in the global telecommunications market, operators around the world are overcoming these pain points by transforming into self-sufficient technology companies. This large-scale evolution involves a multi-pronged effort throughout the organization in order to drive future success.
However, digital transformation can be challenging and has been compared to changing tires on a racecar while it’s still going around the track. For telcos, the days of acquiring and then selling spectrum are almost over. There is still business there, but the big growth opportunity has gone elsewhere: it is now in adjacent businesses and in the services telcos can sell on top of their core infrastructure. This change has transformed the nature of telcos, which may come as a shock but also represents a major opportunity to capture new revenue streams, expand their lines of business and move into new vertical markets.
On top of that, over the past decade, communications service providers have been struggling to adapt to the challenges of the digital economy. Much of this can be attributed to the agile and customer-centric business models of disruptors from other market segments, resulting in increased competition; outdated legacy systems and business processes that are slowing innovation to a crawl; and younger customers that are far more likely than previous generations to switch their service providers to get the best deal. To overcome these obstacles and build long-term customer relationships, CSPs need to implement new technologies, innovate their business models and think more creatively than ever before.
Putting the Customer First
As part of an overall digital transformation, telcos can take a more focused approach and roll out customer loyalty programs as one strategy to meet these challenges. Designed to increase customer satisfaction and lifetime value, these programs offer unique rewards; however, achieving an effective loyalty program in the communications market requires a lot of thought and planning. It also needs to be interesting and appealing to customers, which is why many operators have also introduced or are evaluating the concept of gamification. While gamification elements, which can take many forms, including giving customers incentives as part of an overall loyalty scheme, can offer a critical lifeline for operators, they have been slow to roll out as telcos are still on the fence as to their value.
Traditional loyalty programs often separate customers into tiered systems and provide limited benefits, virtually nullifying their intent. Vouchers for points, infrequent communication, limited reward ecosystems, convoluted redemption processes and inconvenient user identification procedures create even more barriers to customer engagement. Simply put, CSPs have a long history of asking a lot of their customers while giving them very little in return.
To be successful, customer loyalty programs must go beyond simple transactional exchanges and engage with people on a more meaningful and personalized level. Customers want to be able to redeem rewards through seamless and accessible apps anywhere for virtually anything. Striking a balance between functionality, convenience and social experience is fundamental to forging the type of emotional customer connections that will lead to future success. This is where gamification techniques can boost engagement and unlock a number of benefits. For example, most operators have their own apps that allow customers to track usage, see their bills and make payments, but many customers rarely use them due to a lack of incentive. While seemingly simple, adding elements such as rewards, status, leaderboards, a community forum, quizzes and challenges can keep the attention of customers, leading to improved retention.
Loyalty programs will need to evolve to ensure customers are receiving the rewards and benefits they deserve. Increased engagement will enable a greater focus on customer appreciation, entitlement and experience across all channels. In addition, third-party retailer ecosystems with flexible architectures will allow customers to interact anywhere and on any platform.
Ecosystem-Driven Customer Loyalty Programs Provide the Personal Touch
The Business Support Systems (BSS) within operators’ IT infrastructure will play a pivotal role in creating a personalized loyalty program; however, this will require new business and engagement approaches.
Next-generation digital BSS solutions require a service-agnostic charging engine, which will translate all transactions across services, integrate them into membership points and manage the transfer of that value within the operator's ecosystem. Points accumulated by customers or subscribers will trigger status and eligibility entitlements for a variety of benefits, such as bonuses on mobile services or devices or even an upgraded credit card, free shipping and more. Although these benefits may not be specifically related to mobility services, they are part of the digital lifestyle of customers.
Artificial intelligence (AI) and analytics will be fundamental features of digital BSS to increase customer demand for context, convenience and control in all interactions. However, this will require operators to re-evaluate how they provide contextually relevant loyalty programs for their customers, including the ability to recognize patterns, comprehend ideas, plan, predict and identify actions, and make decisions. The explosion in connectivity, intelligent devices and digital interfaces generating this information makes it increasingly possible to convert such data into high-value personalized experiences, augmented by real-time context and customer preferences. Due to the amount of data generated by these processes, AI will need to be integrated into the process to allow CSPs to realize the full value of their loyalty programs.
A leading Asia-Pacific e-commerce company, whose mobile network operator business is disrupting its home market and influencing the way other mobile providers run their businesses, has initiated a robust loyalty program. The massive success of this mobile operator exemplifies the importance of digital BSS in modernizing customer loyalty programs through an analytics-driven approach. While most loyalty programs follow the traditional model of only providing basic returns for a single service, this company takes membership points and rewards to a new level by using AI and analytics to provide personalized loyalty programs across their dozens of lines of business.
Customers in their ecosystem gain points for every action they take, which can be redeemed for purchases, discounts, status and eligibility entitlements across their services. Users are able to qualify for premium benefits, but they are not limited to a specific mobility service. They can redeem their points freely throughout the ecosystem for a wide variety of rewards, including shopping, beauty salons, food delivery and travel services.
This innovative loyalty program also gives customers the option to use points for investment purposes. Customers can use their membership points in the stock market in a controlled and safe investment environment without making an actual cash investment. More than half of the users of the investment service are 30 years of age or younger, and its popularity has helped attract millions of additional accounts to the company’s investment platform.
By incorporating a gamified loyalty scheme, the more partner apps customers used, the more points they could earn to redeem offers from the operator and its brand partners. In turn, the operator gained more behavioral data, which it then combined with artificial intelligence (AI)/machine learning (ML) models to optimize its loyalty efforts and recommend new experiences to its customers.
The digital BSS solution deployed by this company has helped to accelerate and simplify customer acquisitions, engagement, onboarding processes, journey management, quotations, loyalty and lifecycle management. It also supports extensive charging options for mobile service use, including messaging, IoT, advertising and sponsor-supported services. In addition, its service-agnostic charging engine translates usage into membership points for use throughout its extensive ecosystem.
Changing the Game for Customer Experience
In today’s digital economy, the role of AI/analytics-powered digital BSS is fundamental to the evolution of customer loyalty programs, including those powered by gamification, and will help CSPs optimize and personalize the digital experience, as well as keep customers engaged at every step of the way.
Besides giving customers a superior and more engaging experience, the operators themselves will reap benefits such as cost savings and higher revenue through a lower churn rate, faster onboarding, a higher average revenue per user and long-term spending.
If telcos embrace loyalty, gamification and other programs as part of a much larger digital transformation journey, they will put themselves in an ideal position to weather current economic and business conditions and also set themselves up for future success.