A Frederick Reichheld study for Bain & Company found a 5% or more increase in the retention rate can increase profits by 25% or more.
With consumer expectations rising exponentially, telecommunication companies should focus on a continuous digital innovation process to retain customers. Brands can expect profitability to increase from 25% to 125% if they reduce the number of customers lost by as little as 5%. Additionally, a loyal customer spends more than 60% on a single transaction, which guarantees unit profitability of 23% higher than an average customer.
Apart from innovating, companies should also invest in social content to feed into three key aspects of competitive advantage: customer retention, company reputation and brand identity. Creating relevant content on social platforms can help telco companies effectively engage users, retain existing customers, and reach and acquire new potential customers.
For instance, Vodafone and Telecom Italia have created various entertainment activities suitable for social media to connect with customers. They use Facebook to pose lifestyle questions to strengthen the “one to one” relationship between the company and its consumer, increasing brand attachment. By involving customers in the company’s social activities, marketers can also gather meaningful customer data necessary for improving their products and services.
[7 minute read]