There is a strange contradiction in the mobile phone sector. Consumers love nothing more than to complain about the cost, reception or customer services of their phone providers, yet few ever do anything about it.
A YouGov survey this month found that two thirds of mobile phone owners have been with the same network for at least three years while half of us have never switched. Britain may be one of the most competitive markets in the world, but it also seems to be one of the stickiest.
That does not mean that the networks can take customer loyalty for granted. Churn, the rate at which customer’s defect to a rival network, is the Achilles’ heel of the industry. Most mobile phone companies have backed away from the gold-rush mentality of signing up as many customers as fast as possible. Instead reducing churn and retaining the subscribers you have has become the new mantra. Grabbing someone else’s fickle customers is far more expensive than keeping the ones you have happy.
The smartphone revolution has provided the likes of Vodafone, EE, Three and O2 with the means to increase loyalty. The best way to keep customers on side a decade ago was to cut prices or throw monetary incentives at them which come at the expense of profit margins. Yet the computing power of the smartphone means a much smarter approach can be tailored. Apps, in particular, can play a big part in generating a relevant data service that will deter a subscriber from jumping ship.
Vodafone, which once emblazoned its logo on Manchester United football shirts at great cost, now spends a more modest budget developing apps for London Fashion Week and the various music festivals it sponsors. Whether it’s a heavy metal fan off to Download or a pop fan ferrying across to the Isle of Wight Festival, a free branded app with show times and exclusive content can be genuinely useful. Offering tickets in advance to customers is even more enticing as is access to special viewing platforms at the show. No wonder its apps have been downloaded more than 111,000 times.
Another technological innovation that mobile phone companies have embraced is solving the problem of flat batteries. Orange pioneered this with its “Chill ‘n’ Charge” tent at the Glastonbury music festival and a solar-powered charger. Vodafone has since developed a high-tech truck that has been kitted out with biometric technology. Vodafone customers place their palms on to a scanner which makes a map of the veins that is then linked to the phone being dropped off to charge. This ensures that the thousands of identical iPhones left in the truck are quickly returned to the right owner and also wows the customer.
Fi Cranfield, head of sponsorship and events at Vodafone, says: “We’ve focused on offering our customers something that they really value and that is exclusive to them. People used to go to festivals to get away from it all. Today it’s the reverse. People want to be able to keep in touch and share their experiences.”
O2 has launched a host of apps not normally associated with mobile phone companies to shore up its user base. It uses the GPS (global positioning system) chip in a smartphone, typically used for maps, to pipe offers to subscribers based on where they are. Offers range from cinema tickets to sushi or train tickets with the company’s role in the bargain highlighted when the user zaps their phone to redeem a voucher code.
The network has also developed more practical apps so that customers have more transparency over their accounts. O2 users can keep track of their bills and data allowances via an app that is typically viewed nine million times a month. It is planning to launch a service that will allow its users access to account information via Twitter by tweeting a pre-registered hashtag that will trigger a direct message with the desired information. The company has also invested in a free video service via YouTube called Guru TV that instructs people how to get the most out of their smartphones.
Such innovations are in their infancy and will be honed to perfection as smartphones become more powerful and technological breakthroughs, such as mobile commerce and location services, improve. Proving that the more services customers want to use and pay for is becoming the key to reducing churn and cutting cost in a sector not traditionally known for its customer service prowess.