In the midst of a technology and AI revolution with far and wide implications, the telecommunications industry stands to gain from prioritising customer engagement. This blog reviews the importance of the ongoing interaction and relationship between a service provider and customers in telecom, and shows how behavioural science can be used as a catalyst for improving customer engagement.

Customer engagement encompasses all interactions along the customer journey, including promoting and adopting new services and offers, collecting and responding to customer feedback, and supporting customers in troubleshooting. Companies can engage their customers through various online and offline communication channels, such as mobile applications, online portals, bills, troubleshooting bots, and phone calls.

The importance of customer engagement

A successful customer engagement strategy can bring tremendous value to both consumers and telecom companies. It can help enhance consumer welfare by ensuring customers sign up for the right plans and utilise the service to its full potential. By doing so, customers can avoid paying for unnecessary fees or services they do not consume. Effective customer engagement also focuses on reaching out to and benefiting disadvantaged and hard-to-reach customers. It also helps increase transparency and accountability, providing more agency to the customers.

From the perspective of companies, effective customer engagement is crucial to attracting new customers, increasing customer satisfaction, and reducing churn. Moreover, it allows for upselling and increased revenues, as satisfied customers are more likely to sign up for additional products and services.

Many telecom companies have, however, encountered various challenges related to customer engagement, such as low take-up of products and services, mediocre customer satisfaction, and inattentive consumers. Other important questions remain: How do companies get people to overcome risk avoidance (when it comes to, for example, trying out new products)? How do we ensure consumers remain cautious about potential scams and, at the same time, instil trust in the company? How do we encourage eligible consumers to sign up for subsidies and discounted rates?

In combination with predictive analytics and experimentation, behavioural science offers a low-cost, impactful route to improved customer engagement. Below, we discuss five examples of using behavioural science to supercharge customer engagement in the telecom sector.

1. Identify and proactively reach out to customers who don’t usually engage

Some customers may not engage with their service provider as readily as others, such as those with only a phone contract and no broadband. These customers tend to be older, less technologically savvy, and less likely to take advantage of updated and improved service offers compared to broadband customers. By encouraging them to engage, companies can ensure they are empowering their most vulnerable customers to identify contract deals most suited to their needs.

We worked with a UK telecommunications provider and Ofcom to design and test the most effective communications to engage some of the provider’s least engaged customers, prompting many to switch to a better-suited calling plan and engage with the company to better understand their contract. The communications focused on removing either the rational barriers to switching phone plans, such as the time it takes to learn a new technology, or the psychological barriers, such as the outsized perception of how difficult it is to find a better plan.

2. Reduce friction in the customer journey

Behavioural journey mapping – a research method used to describe and visualise the relationship between a service provider and a user over time – is a powerful tool that companies can use to optimise customer touchpoints. To effectively engage customers, companies need to reduce friction along the customer journey, from onboarding to billing, troubleshooting, switching plans, and adopting new services.

Recognising that customers were often overwhelmed by the number of plans and options available, Telstra simplified their offerings, organising plans into clear categories and providing curated suggestions based on past behaviours and preferences. The choice simplification helped increase customers’ confidence in their decisions and reduced cognitive load. This change increased conversions and led to greater engagement, as customers were less likely to delay or abandon the plan selection process.

3. Use gamification to liven up otherwise dull experiences

Gamification is an increasingly popular strategy in customer engagement. It incorporates game elements like points, leaderboards, and badges into non-game contexts. Reward programs that offer customers symbolic rewards, discounts, and exclusive perks can help drive engagement by making customers feel valued and encouraging app interactions to claim rewards. Companies can also encourage users to track and manage their usage efficiently through gamification (e.g., by showing and celebrating milestones or providing a platform for peer-to-peer competitions).

T-Mobile introduced "T-Mobile Tuesdays", a weekly rewards program where customers could claim perks like free meals, movie tickets, and discounts on the app. By offering these perks every Tuesday, T-Mobile encouraged regular, consistent app use and significantly boosted customer engagement with the app. 

4. Use predictive analytics to proactively communicate about problems and offer solutions

Telecom companies can use predictive analytics to identify potential network issues early on, allowing them to notify their customers in advance and proactively offer solutions. They can even go one step further by combining predictive models with behavioural science research to identify customer segments who are most likely to churn and proactively offer them personalised retention incentives, such as discounted plans or loyalty rewards.

Verizon used predictive analytics to anticipate potential service issues, such as network disruptions or billing questions. If Verizon detected a network issue, the company would notify customers in the area with an estimated resolution time, reducing frustration and the likelihood of customer complaints. This proactive approach increased customer satisfaction and reduced customer support calls by addressing problems before they were reported.

5. Understand how different customer segments value different elements of a package

Different population groups often value different elements of a package (e.g., data allowance, network coverage, speed, reliability, price) differently. Experimentation and behavioural segmentation can help define customer segments, measure and rank the importance of varying package elements for each segment, and identify the unique factors influencing consumers’ decision-making. These behavioural insights enable companies to deliver personalised communications and offer tailored services and products.

Vodafone UK analysed customer data usage patterns and sent timely notifications about data consumption, especially when users were close to reaching their limits. The nudges often recommended the best plan adjustments based on customers’ usage data. By reducing the surprise of overage charges and making recommendations based on individual usage, Vodafone built customer trust, increased satisfaction, and improved engagement by encouraging users to check the app regularly.

Improving customer engagement can be mutually beneficial for both consumers and companies as long as it is guided by the principles of increasing customer satisfaction and enhancing consumer welfare. To develop effective customer engagement strategies in the telecom sector, regulators and service providers should work closely together, equipped with the powerful blend of behavioural science, analytics, and experimentation.

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If you are interested in applying behavioural science at your organisation, please don't hesitate to reach out; we'd love to brainstorm ideas with you and potential opportunities to work together!