Minimising Churn: Few Get The Basics Right

Mobile operators must focus on minimising churn, and maximising customer retention by simply fixing the basic problems such as customer relations, before trying to upsell high ARPU users. If operators fail to achieve this, they will hardly recover the costs of platform development and performance upgrades, according to new research from Informa Telecoms & Media.

The Minimising Mobile Churn Strategic Report survey carried out in May 2006 survey provides a snapshot of industry opinion at a time when churn happens to feature quite highly on many operators agendas. The fact that a large proportion of participants (almost half) came from so-called emerging markets demonstrates that the market has evolved.

According to Ezequiel Dominguez, author of the report, "some lessons have been learned from operators competing in more mature markets - not least is the realisation that churn needs to be addressed early on in an operator's lifecycle so that it does not escalate when falling net additions numbers really begin to flatten growth."

Dominguez went on to say that "managing churn is best achieved in an environment where growth is planned and targeted at well-defined customers i.e. niche markets and communities. Operators must ensure that the type of customer is carefully identified and targeted against each proposed service. Then customers should be placed in micro-segments and followed through with a well planned customer centric relationship management strategy."

The overwhelming conclusion from the aforementioned survey is that operators believe churn still represents a growing problem. In qualifying this, the industry also feels that annual churn figures have risen in the last two years - reinforcing the notion that churn is a growing problem.

It seems that operators have set themselves tough goals in terms of achieving desirable churn levels. The vast majority of respondents (75%) said an acceptable level of annual churn would be 15% or less.

Mobile number portability is still high on the agenda, with more than half of the respondents stating that they believed the introduction of MNP to have a big impact on churn levels, although loyalty schemes are not widely seen as having a 'big' impact on retaining costumers.

The marketing department is no longer singled out by respondents as the one department which should really be driving forward churn management. On the contrary, it was recognised that every department has some responsibility if the strategy is to work. The key is to accept that current marketing methods are part of the problem and simplify hugely overcomplicated products and tariff structures. Most operators fail to see their product and service offering from the customer's point of view.

It is very encouraging that such a large percentage of operator respondents (77%) said that they had implemented some kind of churn reduction strategy in the last two years."

Posted to the site on 15th August 2006