the disloyalty that globe handyphone's loyalty and rewards program creates

marketing 101 says loyalty and rewards programs are very effective tools in keeping subscribers happy with your service and more importantly to stay loyal. that means loyalty and rewards programs are meant to prevent existing subscribers from cutting off their subscription with the company and switch to a competitor.


it is also much more cost effective to keep customers loyal than to look for new subscribers. marketing and acquisition costs for new customers is much higher and much more difficult for companies.

what makes all of these critical is that the mobile phone service industry is probably the most competitive mass consumer market in the country. we know this with the unending and heavy advertising and promotions launched by the top three competing companies – sun, globe and smart.

the three competing companies offer unique plans and a full range of options for the consumers to choose from. many of these are value packed, offering very low cash outlay and monthly fees. when the market already competes on price, you know that the market is reaching maturity and is already near saturation point.

the market is also reaching near-saturation point where a large part of the demographics, in practically all segments already own a cell phone and already subscribe to a mobile service provider.

what this tells you is that a mobile phone service provider’s way to market share and revenue growth is to (1st) keep your current customers loyal; (2nd) increase usage of loyal customers through more value added services and (3rd) gain new users.

what is the point then that globe has kept it’s loyalty and rewards program secret from it’s subscribers?

we have been getting some feedback from a yahoogroup we are a member of. members are saying the loyalty/rewards program of globe has been there for a long time, it’s just that they don’t tell their subscribers about it. you only get to know about it by accident – from friends or when you call their hotline number and accidentally ask about it.

apparently, smart is less secretive about their loyalty/rewards program. smart puts it in fine print on your cell phone bill to let you know about it. it is in fine print but at least you are told about it. globe does not put it anywhere in your bill and they don’t tell you about it when you call them. you get to know about it only when you ask them about it.

for me, keeping the loyalty/rewards program a secret from subscribers indicates insincerity. why would you develop a rewards/loyalty program when you don’t intend to let your customers know about it? keeping it a secret from subscribers is very much equivalent to not having one.

we are familiar with rewards/loyalty programs - the SM group has one, mercury drugstore and national bookstore as well. these stores publicize it with posters and their cashiers ask you if you have one. if you don’t , they will ask you if you want to get one. to these stores, it’s not a secret they actively recruit members to it.

the most obvious negative effect of keeping it a secret from subscribers is that the program is not being used as a tool the way it is intended to be used. not having a lot of subscribers using it also says the program is not achieving it’s objectives.

there is a feedback given in the yahoogroup we are a member of - this subscriber has been with globe for a long time, since year 1 of globe operations in 1996. she accidentally found out about globe’s loyalty/reward program from a friend. she calls the hotline number to inquire about it and globe did not even apologize for not letting her know about its existence. disappointed, she closed her globe account and switched to smart. since she moved over to smart, she has gotten 2 new cell phones as her reward and is very happy with smart.

in that incident, the loyalty/reward program that was kept a secret actually caused disloyalty from a subscriber. it achieved the exact opposite of what it is supposed to achieve.

we know that smart telecoms monitors their churn numbers on a daily basis. churn is the result of subtracting the number of subscribers dropping the service versus the number of new subscribers joining the service. having a positive churn means the total number of subscribers is increasing while a negative churn means the number of subscribers is shrinking. a positive churn means increasing market share of number of users while a negative churn is a decrease in market share.

to smart telecoms, it’s important that they continue to grow in market share. a negative churn turns them into a panic and will immediately launch new programs to entice new users or keep existing ones.

that is the kind of marketing that smart does and it shows as smart continue to be the dominant mobile service provider in the country.

smart has an interesting history. smart actually built their market through very aggressive marketing.

smart was not the market leader when they started in the market. piltel which was still owned by pldt and separate from smart was the market leader. globe entered the market and took leadership away from piltel. through aggressive marketing, smart over took both piltel and globe and since that time, smart has not only sustained it’s leadership, it has achieved dominance.

in case globe is wondering why they are unable to get switchers from smart subscribers, perhaps the answer can be deduced from this incident – smart does not keep their loyalty/rewards program secret from their subscribers, they tell them about it. smart users are loyal subscribers because they are hooked by their loyalty/rewards program.

on the other side, in case globe is wondering why they keep losing their post-paid clients to smart – it is probably because they have kept their loyalty/rewards program a secret from their subscribers.

posted here: http://wawam.wordpress.com/2010/04/19/globe-telecoms-secret-loyalty-and-rewards-program-that-creates-disloyalty/