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Customer Retention for Telecom Australia

Retained 33% more customers …

Situation:
Australia’s state-run telephone company, Telecom Australia, faced stiff competition from multinational telecoms when Australia deregulated its telecommunications services. I was the Account Director for the direct response agency Telecom chose to help retain customers in the face of aggressive competitors promising lower prices and superior service.

Strategy:

1. Begin with market research and segmentation.

The most important aspects of campaign development included market research and segmentation. We found, for example, that residential customers were price conscious but not price sensitive. In other words, while they stated that low prices were important, they were actually more concerned with receiving good customer service. Business customers, however, were not concerned with good service so much as with low prices.

Consequently, we developed a two-pronged marketing approach, emphasizing price for businesses and service for residential customers. Telecom Australia developed an array of flexible pricing plans for residential customers, which allowed us to use a “tailored to the way you call” message combining service and pricing benefits. We also segmented by spending levels, type of spending, product, and need. Advertising dollars were focused on the business segment, which had higher volumes, more complex telecommunications needs, and less inertia.

2. Determine the most effective positioning.

Market research also pointed the way to effective positioning. We personalized Telecom Australia’s voice, since the incumbent was perceived as a bureaucratic monolith. And we positioned the incumbent as a consultant or advisor, a one-stop-shop that could help customers navigate the complex and confusing process of deregulation and pre-selection of a telecommunications carrier. Communications were designed to appear simple and straightforward, since customers were well aware of the high cost of advertising, and tended to be turned off by overly expensive-looking design.

3. Use multiple channels of communication.

Because competition was intense and the results of a one-shot pre-selection vote would affect revenues for many years to come, Telecom Australia used a broad-based array of communications, including television, radio, direct mail, collateral materials in retail outlets, booths set up in malls, doorhangers, and branded promotional incentives. We even created “BBQ cards,” which were wallet-sized, accordion-folded, laminated lists of talking points for Telecom Australia’s three hundred thousand employees to use in social situations when they were asked about their company’s role in deregulation.

Tangible results:
Retained significantly more customers than anticipated in Telecom Australia’s aggressive marketing plan. In some areas, we retained 33% more customers than anticipated. (Results varied by geography and timing.)

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