Does ditching flexibility fuel disloyalty for telcos?

31st August, 2022

When Three announced a 250% price increase in pay-as-you-go plans - it raised the question as to why? Such a substantial price increase is unheard of. But to us, it came as no real surprise. Incumbent telcos working from outdated infrastructure are fearful in the face of innovation, and to keep business afloat it takes long, fixed term contracts. But will customers stay, or does ditching flexibility fuel disloyalty?

The loyalty paradox

So why is it that companies like Three continue to retain customers despite their poor reviews, and extreme price rises?

Ethically, there’s a question mark. For customers trying to navigate cost increases, contracts and legal obligations, it can be difficult to understand. Not to mention intimidating to speak to silver tongued customer service teams, persuading them to stay.

We're already seeing people taking a stand against telcos for this. The latest survey from Citizens Advice shows that one in seven people are paying a so-called ‘loyalty penalty’ by staying with telecoms providers, and UK households could save up to £400 on their bills if they switched. The independent charity urged telecoms regulator Ofcom to help end the loyalty penalty, and ensure there are better rights and knowledge in place for customers.

The fact is, people are waking up to this notion of brand loyalty and realising people deserve better. Our report shows that 96% of telcos say that customers are loyal to their brand. But in reality, 64% of customers said that they are likely to switch phone providers within the next few years. There’s a disconnect that’s going to leave the big players behind, and the small players rising to the top.

The next generation of telecoms

In an age consumed by digital, consumers have become accustomed to an easy customer experience with everything they need at their fingertips. Our research suggests that the next generation of telecoms consumers are 75% more likely to leave and look for digital first providers in order to receive customer centric services and a seamless, quick and intuitive experience.

In fact, this movement is already happening, as a recent report from Which? reveals that the four major telcos in the UK are ranking lowest, with digital first challenger brands such as GiffGaff and Smarty on top of the list. Challenger brands appeal to this new generation of consumers breaking into the market. With their agile approach and a customer-centric service at the core it’s clear that flexibility as the foundation for innovation is the way forward.

The golden era for challenger brands

We’ve seen waves like this happen in the tech industry before. Take fin-tech as an example that has made traditional banking and financial services more accessible and streamlined by focusing on the customer experience, accessibility and transparent pricing. And what did we see? Customers quickly forgot their loyalty and switched to challenger brands like Monzo, forcing bigger traditional banks like Natwest to up their game. But the issue is, the bigger players were already too late to the game and ten steps behind on innovation due to legacy IT and outdated business models among others.

The same applies to incumbent telcos. There’s so much potential right now for MVNOs who run on modern, digital platforms focused on automation and self service, with low OPEX and innovation at the heart. Ultimately, this structure allows for the flexibility that today's generation of customers desire.

Take Telness Tech as an example. Our solutions have already proved that four in five support errands can be solved by the customers themselves via an omnichannel admin portal. What’s more, 100% of sales are fulfilled online, from purchase of a mobile subscription, porting and provisioning to activation. Our service also enables clients to offer different deals to customers, and change them quickly to match customer expectations

To summarise, embracing flexibility doesn’t just make sense for customers, it makes sense for business. If research shows anything it proves that loyalty is dead, and flexibility is king as we enter a golden era for MVNOs to thrive.

To know more telness tech and our solutions, contact us on —>sales@telnesstech.com