O2 wins Marketing Society's Loyalty Award
(Awards for Excellence 2006) - June 2006

When customer churn rates in the mobile telecoms market reached 33.4% in 2005, a 17.9% rise on 2003, O2 recognised the need to switch the business emphasis to customer retention.

The company's 'Loyalty rewarded' strategy first targeted the pay-as-you-go sector, where it faced stiff competition from Fresh, 3 and easyMobile. Its approach was simple, yet effective: a poster campaign announced that customer loyalty was recognised and rewarded by offering 10% of top-ups back to its Pay&Go customers.

O2 then segmented its pre-pay customer band, based on value, and undertook a fully integrated awareness and action-driving campaign to target groups of customers.

High value customers were contacted first with 'first to know' teaser SMS messages, which were timed after TV ads in key programme breaks. The firm also sent interactive picture messages to its high value data users and SMS messages to direct O2 Active users to its mobile WAP site. Chatroom seeding was used to spread the word virally and a brand-experience day introduced O2 Angels brand ambassadors to communicate the loyalty message to customers and staff.

The campaign clearly stood out. Just under half of O2's pre-pay customers texted or called to receive their 10% rewards, 78% stated they would be more likely to stay with O2 as a result of the campaign, and 68% rated the rewards as better than others they had seen from competitor networks.

As a result, O2's customer churn fell from 37% in December 2004 to 29% by the end of December 2005.