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Q&A: Mark Stevenson, head of priority & sponsorship at O2

Consumers are notoriously fickle when it comes to choosing a mobile network. Operators that offer the most minutes and data for the lowest price usually win out and customers rarely have an issue with switching to a competitor.

But as the mobile market continues to mature, the networks are having to get much smarter in the way they communicate with customers. As a result, the sector has seen a growing emphasis on added value services.

Loyalty potential

“There is huge potential in mobile loyalty schemes,” says Mark Stevenson, head of priority and sponsorship at O2, which gives early access to tickets at O2 venues through its Priority initiative and other perks via Priority Moments.

“We operate in one of the most competitive mobile markets in the world and with it reaching saturation it’s important to retain existing customers in addition to attracting new ones.”

Yet according to the Loyalty Lens report by Nectar owner Aimia, just 12 per cent of people in the UK are signed up to a mobile incentive scheme. Moreover, its survey of 2,062 consumers suggests that this is a hugely untapped area.

The report notes that among those who have signed up, the most popular scheme is O2’s, with 46 per cent subscribing to Priority. As of last December, 29 per cent were signed up to an Orange initiative, 27 per cent to Tesco Mobile and 21 per cent to Vodafone. Fewer than 12 per cent cited EE.

Soon it won’t be a race to sign up new customers, because there won’t be any. It’ll be a game of differentiation 

Making schemes different

But the mobile loyalty sector could be set for “rapid acceleration”, says Aimia’s vice president of global digital strategy, Martin Hayward. “No longer will it simply be a race to sign up new customers, because there won’t be any. Instead it will become a game of differentiation,” he says.

“If you ask young people today what their most important possession is, more often that not they will say their mobile phone. The potential for that relationship to be absolutely key to people is enormous, so I would expect a lot more activity as companies realise they need to hang on and build stronger relationships with customers.” 

Last week Weve – the joint mcommerce venture between EE, O2 and Vodafone – launched Pouch, an initiative that stores loyalty cards, vouchers and other content from retailers. Food chain Eat is the first to trial the scheme.

Unsurprisingly, those most likely to sign up to a mobile loyalty scheme are in the 18 to 34 age bracket. Even then, just 20 per cent of those surveyed are a member of one. Interest drops off considerably for older age groups, to about 10 per cent among those aged 35 to 64, and to 4 per cent for the over-65s.

Value for money

O2 launched the Priority initiative in 2011 with the aim of offering customers more than just minutes. In turn, it hoped to reduce churn. “We wanted to create a loyalty programme that would enable O2 to stand out in a crowded marketplace while offering customers something they couldn’t get anywhere else,” says Stevenson.

Tesco-Bank-Mobile-2014-460
Tesco Mobile draws on the success of the Clubcard, while EE runs ads with Hollywood star Kevin Bacon (below)

O2 uses real-time customer insight gained from the platform to offer rewards. Recently, for instance, Lady Gaga starred in a TV ad for the brand to publicise the fact that O2 customers could buy Priority tickets for the UK leg of her tour – artRAVE: The Artpop Ball – three days before they went on general sale. The network also partners with brands such as Asos, Odeon, WH Smith and Caffè Nero to offer members additional deals and offers. 

Following the merger of Orange and T-Mobile under the EE umbrella in the UK, the EE network has also taken steps to update its loyalty offer. For example, EE Wednesdays – formerly known as Orange Wednesdays – offer two-for-one cinema tickets on the same day each week to customers on an EE, Orange or T-Mobile price plan. 

EE has also launched a personalised entertainment site called EE Tickets, a revamped version of the Orange Fun Finder site that is now available across the entire network. The service, in partnership with Last Second Tickets, offers registered customers free personalised alerts and discounts for the types of events they have expressed an interest in. These include music, comedy, theatre, sport and family-friendly attractions. As EE director of propositions Simeon Bird explains: “[It] is another opportunity for us to add value to our customer offering.”

Pay as you go


When it comes to loyalty bonuses, Vodafone’s focus is more on pay-as-you-go customers. Each time they top up, it sends them a redemption code as part of its Freebee Rewardz scheme. Using these points, customers can ‘grab’ a reward from a random selection of three prizes. A Star Reward, for instance, could be a personalised phone case. Alternatively, they can ‘grow’ points and claim something more valuable such as a phone, a camera or a store voucher.

Since its launch, Vodafone has expanded the programme to include seasonal themes. To coincide with Valentine’s Day and Mother’s Day, coming up on 30 March, customers could win a one-carat diamond Star prize this month, as well as other love-themed gifts.

But as Aimia’s Hayward points out, it would be a mistake for networks to overlook contract customers on the basis that they have signed up for longer. “Pay-as-you-go customers may be more vulnerable to switch because they’re not locked in, so they do need attention and a reason to stay,” he says. “Equally, it would be foolish to think that just because someone has signed an 18-month contract that they won’t look elsewhere at the end of that time if they are not satisfied.” 

Customer satisfaction

O2’s Stevenson agrees that Priority has had a “positive impact” on both pay-monthly and pay-as-you-go customers in terms of reducing churn and improving customers’ average customer satisfaction index (CSI) score. 

EE-Film-Club-2014-460

Despite being one of the UK’s smaller networks, Tesco Mobile is the country’s third-most-used loyalty programme, according to Aimia, in part because Clubcard is such a well-established initiative in the supermarket sector.

Pay-as-you-go and contract customers can collect triple Clubcard points for every pound they spend. In addition, Tesco offers family perks, so when a customer adds a family member to their account, each person can choose from 150 minutes of calls to any network, 500 minutes to other Tesco Mobile numbers or 250MB of data.

Another of the smaller networks, Virgin Mobile, is keen to bulk out its offer by combining benefits across the rest of the Virgin Media portfolio. Virgin offers its broadband, home phone and TV customers exclusive mobile packages such as inclusive handset insurance and free calls between Virgin home phones and Virgin mobiles. 

Additionally it offers early-bird access to V Festival tickets and entry to the music event’s ‘Our Garden’ hospitality area, reserved for Virgin Media customers. The company’s head of mobile product and commercial, Annie Brooks, says: “Building customer loyalty is a must, and over the past few years the loyalty landscape in the mobile market has evolved into multi-tier programmes with rewards and offers going beyond the traditional ‘one offer fits all’.

“I expect loyalty programmes will continue to evolve as customer analytics focus on micro-segmentation and drive multi-tier loyalty campaigns. The use of digital channels to deliver tailored and personal loyalty campaigns is a key driver for greater customer engagement, conversion and retention.”

Outside the mobile industry


Alex Kozloff, head of mobile at the IAB UK, thinks mobile operators can learn a lot from other sectors. She cites Nando’s mobile app and Subway’s Subcard, which enable diners to collect rewards via their mobile and feature in the top 10 food and drink apps on Apple’s App Store. “There’s a lot of opportunity for cross-category inspiration in mobile, so even though it might seem natural for a mobile operator to do something on mobile, they can still learn from others,” she says.

“At the end of the day it should always come down to consumer benefit. No matter what the category, loyalty schemes only ever work if the consumer feels they’re getting something in return.”

Loyalty in the UK

Take-up by sector

Source: Aimia Loyalty Lens


Supermarkets 75%


Pharmacy and beauty 32%


Petrol stations 26%


Food and drink establishments 26%


Credit card providers 18%


Home improvement retailers 12%


Mobile phone 12%


Fashion retail 11%


Airlines 11%


 
 

Q&A

Mark Stevenson
Head of priority & sponsorship at O2

Marketing Week (MW): Which offers and competitions have been particularly successful since launching O2 Priority Moments?

Mark Stevenson (MS): Since launch in 2011, Priority Moments has saved our customers over £40m, with offers from over 1,000 high street brands and nearly 6,000 small and medium business brands. Some of our most successful offers have been around key moments such as the Queen’s Diamond Jubilee, where we offered a free pair of Union Jack flip-flops from Bhs. The offer had over 50,000 redemptions over one weekend.

MW: What do you have coming up for Priority in 2014?

MS: In 2013 we launched a free prize draw functionality within the Priority app, which enabled us to offer a range of easy-to-enter competition offers, from yacht cruises to flight vouchers and private cinema screenings in UK locations. We saw more than 200,000 people enter to win one of two Ford Fiestas during our heavyweight summer campaign, for example.

MW: How does Priority help O2 gain additional insight about customers?

MS: Priority enables us to gain valuable insight into customer preferences and buying behaviour. Through ongoing bespoke research, social media tracking and behavioural analysis, we can identify the best times and methods to target customers with offers and successfully drive everyday engagement to help maintain stronger customer relationships and increase overall customer satisfaction.