Archive for August 21st, 2008
Loyalty programs and profitability – part 3 – Key success factors in loyalty programs
A loyalty program in telecom is designed to retain customers by rewarding current consumption and behaviour (through handset replacement and promotions campaigns) while simultaneously enticing new acquisitions to change their behaviour. A combination of effective communications, promotions, perceived reward value and convenience are often the catalyst in predicting a program success. The price / value equation plays a strong role if the loyalty program has a participation cost assigned to it as consumers take more seriously things they have to pay for, although this practice is not spread across the telecom industry.
The following elements must be understood from the consumer’s perspective for a loyalty program to be successful:
1. Actual value of the reward
2. Perceived value of the reward
3. Relevance to the customer
4. Attainability levels
5. Convenience or ease of use
