Mobile operators must focus on minimising churn, and maximising customer retention by fixing the basic problems such as customer relations, before trying to upsell high ARPU users, according to new research from Informa Telecoms & Media. If operators fail to achieve this, says Informa, they will hardly recover the costs of platform development and performance upgrades.
Informas Minimising Mobile Churn Strategic Report & Industry Survey, carried out in May 2006, provides a snapshot of industry opinion at a time when churn features 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.
The report analyses the real factors determining customer satisfaction,
and establishes the key issues in reducing churn and achieving optimum
loyalty and retention strategies. It provides an evaluation of the
global telecoms market, with specific reference to the impact of churn
and the resulting decline in revenues. The report addresses and
provides guidance on how to tackle churn in terms of business processes
and through the use of available software solutions.
Some lessons have been learned from operators competing in more mature
markets says report author Ezequiel Dominguez. Not least is the
realisation that churn needs to be addressed early on in an operators
lifecycle, so that it does not escalate when falling net additions
numbers really begin to flatten growth.”
Dominguez adds 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 he says. 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 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 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 customers point of view. More encouragingly, a large
percentage of operator respondents (77%) said that they had implemented
some kind of churn reduction strategy in the last two years.
The report costs 1,950 for a hard copy, 2,925 for a single-user PDF,
or 3,900 for a hard copy and single-user PDF. Multi-user licence
prices are available on application by calling 020 7017 5555 (UK) or 508 453 4894 (US).
More information about the report here.
