Consumer loyalty critical to telcos

Jörg Erlemeier, Head of Middle East and Africa Region at Nokia Siemens Networks spoke about the future of consumer loyalty at this year’s SATNAC conference, an annual ICT conference hosted by Telkom.

According to Erlemeier incumbent telecommunications companies have an advantage when it comes to retaining consumer loyalty as they are still widely trusted by consumers.

In a global study conducted by Nokia Siemens Networks they found that banks and CSPs (Communications Service Provider) are the two most trusted types of organistions worldwide.

Closer to home, Erlemeier says that Telkom is the most trusted CSP in South Africa and that among CSPs, ISPs are more trusted than mobile providers, which are more trusted than fixed line providers.

For CSPs to foster loyalty, Erlemeier mentioned two things: Privacy concerns and quality of service.

According to a Nokia Siemens Network study cited by Erlemeier, privacy is a hot topic in South Africa with 87% of respondents indicating that they are concerned about privacy violations.

But it’s not all about privacy, consumers also want reliable broadband Internet access anytime and anywhere, Erlemeier said.

One of the crucial ingredients in ensuring that a customer’s needs are met, with regards to privacy and quality of service and the like, is competition.

Competition is important

Erlemeier added that freedom for consumers to easily change between CSPs is good for industry and that a lack of competition is an “innovation disaster”.

There are small exceptions, Erlemeier noted, for example in deregulated markets where they’ve advised that certain regulations be kept in place until the required infrastructure is built.

Competition is also good in that it helps encourage customer retention.

Customers the real asset

An increase of customer retention of 5% results in a profitability increase of 75%, Erlemeier said, citing a study conducted by Bain & Company about South Africa and Nigeria.

“Consumers are the real asset,” said Erlemeier, “not the network.”

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Consumer loyalty critical to telcos