‘What Have You Done for Me Lately?’

This year, the holidays had a different feel to them. Perhaps it was the endless box-office reports of sagging retail sales and predictions of massive retail closings and consolidations for 2009; or maybe it was the rash of layoff announcements; or possibly the black cloud hanging over the automobile industry. Regardless, consumers are being exceptionally cautious with their precious money as uncertainty lies ahead.

So what does this mean to telecom in 2009? We already are seeing accelerating consolidation of vendors and operators, as each tries to maximize their opportunities and reduce their costs. Startups will find it difficult to acquire funding and those that do will find it challenging to convince operators to take a chance on both their company and possibly their technology.

In these uncertain times, it is important and necessary to go back to the basics of business and realize the value of the customer. While new customer acquisition is certainly important, maintaining the existing customer base is equally if not more critical to long-term success. And with a strong competitive environment, it becomes a question of “what have you done for me lately?”

Customers don’t like to switch service providers. Perhaps it is because for such a long time they never had the choice. Or maybe it is simply the pain, the backside factor of changing e-mails, and/or numbers or going through the painful installation process. But with incentives flowing freely, customers are looking at all opportunities to save a buck.

Maybe it is time for operators to put in place a rewards system for its customers to let them know how much they are appreciated — kind of like frequent flyer programs (when they used to be really good). These programs could provide incentives for customers to stay with their operator — such as free upgrades, features and VoD movies, priority call handling/customer service, or even discounts on new CPE. Regardless, it could go a long way toward developing a new path to customer loyalty or at least give the customer reason to think twice about switching. While this is not a new or novel ideal, perhaps its time finally has arrived.

Teresa Mastrangelo is principal analyst at broadbandtrends, a service of The Windsor Oaks Group LLC, which is an independent market research and consulting firm specializing in the coverage of network transformation activity related to broadband infrastructure and services, including IPTV, VoIP and NGN.