Part of the family: Membership-based approaches for operators
08 June 2017 | Dr Janne Ohtonen
The question of how operators treat their subscribers has become a burning issue in this era of customer-centricity. This is evidenced by the fact that customer loyalty and advocacy metrics are significant areas of focus within their business KPIs.
The reason is simple. The quality of customer experience a service provider, delivers, across its entire business operations, remains the last significant competitive differentiator it has. But doing well regarding the share of wallet, net promoter score and overall customer satisfaction metrics is about more than offering the best features and the lowest price. Service providers must focus on giving their customers a reason to belong and therefore pursue a membership and community-based approach.
Achieving Emotional Connectivity
“Sense of community is a feeling that members have of belonging, a feeling that members matter to one another and the group, and a shared faith that members’ needs will be met through their commitment to be together” (McMillan, 1976)
Whether an individual is treated as a subscriber, a customer or a member will have a huge bearing on their emotional closeness to the brand. People tend to mirror the emotions that are displayed towards them, and individuals will reflect the attitudes that service operators show towards them.
The concept of “belongingness” describes our emotional need to be an accepted member of a group and our deep-seated desire to belong to something greater than ourselves. This concept— expressed through membership and community—can have a huge impact on customer metrics in telecoms.
Membership in Telecoms
In principle, membership-based approaches, while not yet widely adopted, are not new to the telecoms industry. Both O2 Priority in the United Kingdom and 3Plus in Ireland are examples of membership-based services operators offer. The MVNO GiffGaff is well-known for its community-based business, where anyone can become a member by purchasing their products. In fact, in January the company was ranked the best UK service provider for customer satisfaction by The Institute of Customer Service.
Membership-and community-based approaches can serve to strengthen customer loyalty by building a strong connection with members, driving more sales through higher Net Promoter Scores and measurable customer satisfaction. According to Crezeo (2015), 53% of consumers who are part of a social brand community are more loyal to the brand.
These approaches can also allow the business ready access to customer opinion, which can, in turn, enhance products and services. Members are typically much more willing to offer up ideas and feedback than subscribers. Research from Salesforce found that 86% of Fortune 500 companies report that communities provide better insight into customer needs and 64% state that brand community has improved their decision-making (Crezeo, 2015).
What makes a member?
If a telecommunications service provider is to adopt membership or community-based business models, it needs to consider four main components: membership, influence, meeting needs, and sharing an emotional connection.
If companies treat people as subscribers, their emotional connection with the service provider is likely to be very low. The relationship will be functional, where the operator provides a service to the subscriber and hopes that they will keep generating revenue. However, a membership approach stimulates the highest level of emotional engagement. ‘Members’ feel that they are part of something bigger than themselves.
Influence has to work both ways, with members feeling that they have influence over the brand and the brand having influence over its members. If the individual is better off without membership, then it is worthless to them (or even harmful, as membership typically requires some effort and commitment).
Membership Models for Telcos
When it comes to creating their own model, service providers do not have to choose between a community-based model like GiffGaff, or a membership-based service like O2 Priority. Instead, they can mix and match a wide variety of membership-based approaches, which can be bought or earned by members or exclusively given by the operator.
In a ‘bought membership’ model, anyone can buy in. Another way to create the membership would be to base it on earning membership status through activities. Frequent-flyer programs are examples of such models. When a customer completes enough qualifying actions (such as flights), the airline awards a membership status that gives specific benefits. Earned membership benefits can be much simpler, too — Tesco grocery vouchers, for example. By spending enough with Tesco, customers are given vouchers to use in store and online.
The third type of membership is ‘exclusive’. This would see a range of ‘courtesy services’ being offered according to a customer’s ability to fulfil certain criteria.
Considerations for operators
When deciding whether a membership-based approach would work for their business, service providers must consider a range of considerations. Would their customers respond well to a strong sense of belongingness? Do their existing business models lend themselves to a membership-type approach? If the aspiration is to be a simple, low-cost service provider, then a membership model may not be appropriate. But if the company aspires to be a leader in the market for customer value, then it might make a difference regarding creating differentiation.
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