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Published on 10 April 2014

For most broadband and TV customers, rewards are what you are promised for signing up for the services, as part of shortsighted sold-and-old customer acquisition plans. Verizon is looking to make the post-sales experience rewarding as part of a new loyalty program for residential and small business users of its high-speed Internet services and FiOS TV.

Verizon's nationwide My Rewards+ program rewards loyal and active customers with redeemable points in a manner akin to programs long established in the credit card, airlines and retail industries but beyond rare in the pay TV and broadband businesses. That could change if others follow suit as is common in the service provider space.

"In 2013, Verizon's consumer business conducted a study to assess the factors driving customer defection," recalled Verizon Spokesman Bob Elek. "The research showed that one of the top three reasons was customer loyalty and Verizon not having a customer loyalty program was a major factor for customers leaving. That was the origin for the My Rewards+ program. We heard clearly from our customers and we want them to feel valued. "

Other reasons for customers leaving for competitors are a lack of satisfaction with the provider and value of their offerings to name a few. Loyalty programs aren't a panacea, but they are a core way to address customer retention, an area in seeming constant need of improvement.

Seeking Rewards

True rewards programs are about as rare with top TV providers as the found money you stumble upon when cleaning under sofa cushions. That leaves customers with a less than rewarding post-sales experience, with follow up only coming when there are more services to be sold.

The closest thing to a reward is a customer referral bonus first found in employee benefits handbooks in corporate America decades ago. Yet even that is clearly a customer acquisition tool, not a true reward of part of a loyalty program. Verizon and AT&T already offer them. The latter offers incentives called rewards for customers who sign up for its services bundle, which includes electricity and is in pilot in PA.

How it Works

The program is an innovative customer retention that focuses primarily on rewarding FiOS (TV and Verizon high-speed Internet) customers with points for either doing more business with the service provider or enabling it to streamline its invoicing operations. One is a revenue-generator, while the other is a cost cutter. Verizon Wireless has a separate program.

My Rewards+ gives residential and small businesses customers points, 100 equivalent to $1, for certain "events. "For example, Elek explained," if a customer orders FiOS On Demand movies; selects certain bill options like going paperless, paying with a mobile application or paying online; renews their contract; upgrades service; experiences a personal milestone like a birthday or anniversary; plus many others, they receive points."

Point(s) Taken

In a blog posted yesterday, Verizon explained specifically that merchant cards require (1,000 or 2,500) and how many points are associated with customer actions and achievements with FiOS. Merchants issuing prepaid VISA cards include Starbucks Coffee, L.L. Bean, Panera Bread, Target, Amazon, Dunkin' Donuts and Staples.

Point values associated with various activities includes paper free billing (100), on time bill payment (100), FiOS On Demand rental (50), Internet upgrade (250), renewing your contract (500), birthdays (100), service anniversaries (500) and social media engagement (liking the program on Facebook), among a number of others, explained Elek.

There was no mention of whether use of Redbox Instant, the streaming movie service it co-created with Redbox would be included, the same goes for use/upgrades of CE CPE such as set-top boxes, digital video recorders (DVR) or wireless networking equipment/Internet access devices. The blog didn't mention FiOS offerings such as multi-room DVR and features such as remote access use of DVR.

Broad Outreach

The program went national on March 16. Verizon began a multi-dimensional My Rewards+ customer education effort in earnest late last month that Elek said included the following tactics:

• Email Blast to all regions
• Position in the 3/31 Spotlight Email
• Bill Messaging: Started 3/31
• Banners on My Verizon and Web Mail
• Information Pods have been inserted in the emails that are triggered when customers purchase services
• IMG (Interactive Media Guide) Pod/Notification
• Cross Channel Ad Spots
• Social Media posts in Twitter and Facebook

Getting Started

There is no cost to the program, said Elek. Customers need to visit Verizon.com and establish a user name and password. There are only a few basic conditions for using My Rewards+

• Customers must have internet and/or TV Service with us (FiOS or other Verizon landline high-speed Internet or FiOS TV). Voice only customers cannot enroll.
• Only Primary Account holders can access the rewards site. Subaccounts can help earn points, but they cannot redeem or access the actual My Rewards+ pages.

FiOS customers manage the program through the My Verizon portal and also have access to it in the mobile environment. Customers have the choice of redeeming their points for a reloadable Master Card, merchant gift cards or donating to eligible charities.

As to the future of the two week-old program Elek said there currently no plans to expand the services required for eligibility. "Verizon Wireless has a separate loyalty program that is in trial and there are no plans to include electricity," said Elek in reference to the Comcast-NRG electricity partnership trial in parts of PA. "The program has only just gotten started and I anticipate that it will be somewhat dynamic but for now we are happy with where it is at."

Trial Balloon

Earlier this year, Verizon conducted a trial of its rewards program involving over 3,000 customers in Florida and Texas, according to Elek. "Over 37% of the customers invited in the pilot program enrolled. We later surveyed the participants for feedback and suggestions. "

Elek called this tremendous success that justified the pent up demand for a loyalty program. The company then had an independent survey conducted in which 133 pilot participants participated. "The following "is a summary from what our customer's had to say."

Key findings included:

• Just over 25% say the program made them feel more valued
• About 20% feel an increased likelihood to stay or a stronger bond with Verizon due to the program
• Over 50% said they would continue to use the program
• 72% of the respondents found registering for the program to be quite easy
• Nearly half of program members would recommend it to a friend

The Bottom Line

Perhaps the only thing worse than not having an effective loyalty program is the blowback sustained after diluting or eliminating a popular one. Ask the airline industry what follows those actions, especially after mergers, acquisitions and cost cutting. They have been overtaken by financial institutions whose points are increasingly more valuable for air travel. People prefer to do business with those companies they like and are likely to recommend to others.

So what's not to like about a loyalty program? The answer is nothing, especially in an industry where the biggest players don't really offer them. Most importantly is the need here to eliminate the out-of-sight, out-of-mind post-acquisition treatment widespread in the residential and small business segments of landline TV and broadband.

The programs can also be a big win for those that choose to offer them when it comes to customer retention, revenue generation and cost cutting/avoidance. So why aren't they prevalent today? The same was also partly the case for term agreements and upgrade constrictions with wireless carriers.

When one big player makes a move (good or bad for customers), in any industry, there are many followers.

Stay tuned.