Analysis by the UK comms regulator, Ofcom, has found that sending annual best tariff notifications (ABTNs) to phone users whose contracts have previously expired is an effective way of increasing the number who enter into new contracts with the same telco. ABTNs inform phone users of those tariffs offered by their current provider which would represent best value to the customer. Ofcom’s research compared results for major telcos since 2020, when ABTNs were introduced. Per their report:
We find statistically significant increases in re-contracting rates in response to receiving ABTNs. The results show that ABTNs had the biggest positive effect among Three’s customers. In the case of O2 and Tesco we observe small effects, with ABTNs increasing recontracting rates by 1-2 percentage points. Sky Mobile’s results show a statistically insignificant positive effect. Overall, our analysis suggests that ABTNs had a small positive impact on re-contract rates.
Even a single percentage point increase in re-contracting is a net gain for telcos, given the negligible cost of issuing the annual notifications. Customers who are out of contract are free to churn to another telco at any time. Some telcos may fear that ABTNs would remind customers to think about churning, but Ofcom’s research found that far fewer customers switched providers after receiving an ABTN than the number who signed new contracts with their existing provider.
Ofcom also researched the influence of notifications sent to customers at the end of their contracts. These notifications are meant to perform a similar role to ABTNs but the data indicated that they have far less impact.
The delivery of annual tariff notifications should be exploited by telcos. It represents a great opportunity to show customers they are wanted by analyzing their historic usage and then making customized recommendations about tariffs that suit the customer’s needs. Other telcos will advertise the best plans they have available, so it makes sense for each provider to leverage the information advantage gained by knowing how each user relies on their phone. Optimizing revenues by analyzing customer usage is naturally adjacent to the analysis involved in revenue assurance but it requires the telco to see each customer as a different person with different needs. Showing customers which tariffs are the best match to their needs will engender loyalty in a way that cannot be realized through marketing alone.
The full report on the impact of best tariff notifications and end of contract notifications is here.
