U.S. Cellular Joins Mobile Loyalty Galore

Posted by: Olga Kharif on September 29, 2010

Mobile carriers are giving loyalty programs another look. That’s because most Americans who want a phone already have one and carriers increasingly have to resort to stealing customers from each other. Now regional carrier U.S. Cellular is about to jump into the loyalty-program fray.

On Oct. 1, the U.S.’s sixth-largest wireless service provider will start giving bonuses to loyal customers in hopes of making them stay with the service longer — and of even luring consumers away from rivals.

Customers will accumulate bonus points throughout the life of their first contract with U.S. Cellular, which serves 6.1 million people in 26 states, and in the months after it expires. The bonus points will buy accessories, ringtones, caps on overages, and discounts on new, replacement phones. Customers whose contracts expire will be able to buy new phones at the same, deeply subsidized price that new customers can — but without having to renew their contracts, which is what most other wireless carriers require their users
to do. Plus, they’ll be able to cut the price further with their bonus points.

For mobile carriers, retaining customers has become priority No. 1. Hence, the loyalty programs, which have already worked wonders for grocery stores, hotels and airlines. AT&T Mobility already offers customers who renew their high-priced contracts discounts on service plans. Earlier this year, Verizon Ventures invested into CardStar, a company that makes mobile loyalty applications. Now, U.S. Cellular is jumping into the fray.

“Our expectation is that, over time, our customers will stay longer,” says CEO Mary Dillon. In the second quarter, the carrier blamed competition for losing 3,000 customers. The carrier’s 1.4 percent monthly turnover rate is among the lowest in the industry.

With the bonuses system, the Chicago-based company hopes to attract new customers, and to see its net customer additions jump 10 percent a year, Dillon says. The new customers will have to sign a contract initially, so most U.S. Cellular subscribers will still have a contract in the next few years.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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