How telcos can strengthen customer loyalty

To improve customer loyalty, companies should focus on simplifying their processes and diversifying rewards.

The drive for greater customer loyalty remains a major challenge for global telcos, which, on average, are currently capturing just 60% of their full customer value potential.

According to a new analysis by strategy firm Simon-Kucher, one of the ways for telco operators to strengthen loyalty is by elevating the loyalty programme proposition.

“Loyalty programs drive a 43% increase in CLTV [customer lifetime value], making them the single most powerful engagement-to-loyalty conversion tool,” the analysis said.

“Yet, whilst 80% of operators offer a programme, only half of customers are enrolled. The other half are aware but unregistered. This batch represents a prime conversion opportunity,” it added.

To address this, telcos were told to simplify enrolment through one-tap sign-ups in the telco app and at physical touchpoints, offer a mix of monetary rewards and non-monetary perks, and use gamification to keep customers active.

Companies should also tap into predictive analytics to identify early churn signals such as reduced app usage, changes in payment patterns, or negative service interactions. This allows telcos to intervene before attrition occurs.

“Personalised outreach, service recovery gestures, and targeted offers can turn at-risk customers into brand advocates,” the experts said.

Simon-Kucher also noted that high-quality, multi-channel support remains a decisive loyalty factor.

“Consistent interaction across service touchpoints doesn’t only build trust but can almost completely compensate prior dissatisfaction on earlier service encounters and thereby encourage longer tenure,” it added.

After working on loyalty, the companies should then ensure they maximise the revenue potential of each relationship through up-selling, cross-selling, and value-added services (VAS).

The analysis noted four monetisation accelerators for telcos, which are identifying and communicating key portfolio differentiators, transforming VAS sales initiatives, introducing new handset monetisation models, and driving convergence in a margin-optimised way.