Can You Buy Loyalty?

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Customer Loyalty
Customer Service
Over the past weekend, I stumbled across an article about how AT&T is offering T-Mobile customers up to $450 in incentives to switch wireless providers. AT&T's program, which includes a $200 credit plus a phone trade-in that could be worth up to $250, is in response to T-Mobile's recent efforts to attract new customers by offering cheaper prices and greater flexibility. In a market where customer churn is particularly high, it begs the question as to whether a company can buy its way to customer loyalty - or whether financial incentives simply offer an opportunity for a company to get a foot in the door.

Over the past weekend, I stumbled across an article about how AT&T is offering T-Mobile customers up to $450 in incentives to switch wireless providers. AT&T's program, which includes a $200 credit plus a phone trade-in that could be worth up to $250, is in response to T-Mobile's recent efforts to attract new customers by offering cheaper prices and greater flexibility. In a market where customer churn is particularly high, it begs the question as to whether a company can buy its way to customer loyalty - or whether financial incentives simply offer an opportunity for a company to get a foot in the door.Cost certainly matters to wireless customers. A WDS study of mobile phone users in the U.S. finds that 69 percent of customers who were previously unlikely to switch carriers would consider switching if their existing carrier increased its prices by 10 percent. The same study finds that a high percentage of wireless customers would consider switching carriers if they were offered a comparable price cut.

But cost is just one component in the loyalty equation. Financial incentives may help a company lure customers from a competitor, but loyalty is something that ultimately has to be earned by providing customers with consistent experiences, great service, and a customer-centric approach to doing business. In the battle for wireless customers, carriers that provide reliable service, good experiences, flexible plans and demonstrable value will be best positioned to win the hearts, minds, and wallets of educated customers.

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EXPERT OPINION