Questions & Answers

Customer churn in mobile is a hot topic. New smartphones are helping dealers and operators wrap customers with smart packages, reducing the churn in the fickle, price-chasing mobile market by covering the latest and greatest handsets, plus data packages and minutes, and on the business side, added services. What is your company doing to help reduce churn? Is churn reduction something that we will see more of over 2010, and if so, why is this possible? What are your top tips for taking customer churn down to single digit figures?

Ronnie Nag, Quore managing director:

How can you stop churn when the only way to win new business is from other networks or dealers?

However, saying that, now that we live in a revenue-shared world, it’s easier to retain clients as we get paid based on client spend. It’s the low spending clients that I feel are in danger of moving away.

The question we should all ask is, which network will be desperate enough (as they need to increase subscriber numbers) to throw money at dealers to acquire new business, without any spend criteria. The only way you can reduce churn is to maintain that relationship we all want with our clients, but the biggest problem for our industry is that we don’t want to invest in maintenance of those customers, as we are so busy trying to hit network targets that these areas as always ignored.

The simplest answer to bring down churn to single digits is to look at long term gain, something that the mobile industry has found hard to do.

Ronnie Nag, Quore managing director

Gareth Limpenny, Frequency Telecom managing director:

The growth in smartphone usage will be good news for the networks in combating churn, as the more customers use and get familiar with the features, benefits and applications, the less inclined they will be in changing network for a small monthly saving.

There is huge education job to be done with customers on getting the best use from smartphones. To date, it’s the dealers that have made the running in educating users, whereas the networks have more or less concentrated on getting the connections and delivering the boxes.

The networks will need to ensure strong retention programmes are in place, which they should be able to do with the increase in ARPU that smartphones will generate.

Loyalty programmes will no doubt be a part of that and will have a limited affect in reducing churn, but it’s customer service that will become more of a prized asset.

Customers in general, particularly those that have experienced high levels of customer service when overseas, are growing more impatient with organisations that appear to be keen to make profit without providing any support in return. Technical support is an area that customers seek and the networks that offer better service in this area will see the benefit in their customer retention.

Gareth Limpenny, Frequency Telecom managing director

It will be interesting to see how much of the new Orange/T-Mobile proposition includes retention programmes.

Keith Horsted, Nine Telecom mobile services manager:

Churn is nothing new and is often fuelled by the networks themselves, who wield the blunt instruments of price or some ‘new’ or ‘unique’ handset rather than concentrating on good service and value for money.

At the risk of sounding like a grumpy old man, too late, customers have been conditioned by the network’s own reward mechanism to expect new handsets every year or two years and have created the belief that handsets are free!

Education will play a key part in the reduction of churn, in the sense that people need to understand that very few things are free, including handsets, and that the selection of the correct or appropriate tariff is more valuable than the network offering a higher capacity that will not get used.

It seems that few people realise that they actually pay for the minutes or data that they don’t use! It’s a sobering thought that in 2008, £8 billion was wasted in the UK by people who were either on the wrong tariff or did not use their inclusive minutes (David Budworth, The Times Saturday June 14 2008 pp 6-7). Any one who points this fact out to their customers will instantly elevate their standing from a supplier to a trusted advisor and will secure the most valuable asset in the market – trust.

Keith Horsted, Nine Telecom mobile services manager

Once trust is obtained and more importantly, retained, it becomes easier to upsell other products and services such as fixed line, data and value-adding applications. This concept in itself makes the customer more reliant on your services and therefore less likely to churn.

However, forget at your peril that the customer always has a choice and if your service falls below an acceptable standard, the customer will ‘create’ reasons to leave and the psychological contract between you and them will be broken.

I don’t see churn increasing this year; in fact, with the introduction of innovative products and services I can see churn actually reducing as we make our customers lives easier and therefore remove the need to move anywhere else.

Eitan Linker, Emoze CEO:

Our company is helping reduce churn by creating even more services for mobile phone users that operators can offer to their customers.

We have also now launched our first push mobile content application, Soccer Updater. This provides real time information related to the Champion’s League and to the world cup due to take place in South Africa in 2010. It is this kind of application that will help with customer retention as consumers want the latest information at their finger tips and they want it as up to date as possible; all without having to change operators to someone who can provide exactly what they desire.

There is a big market for mobile applications and anticipating what the consumer wants now, and being able to provide it, will ensure lower customer churn figures. Keeping up with the latest information trends will be a key priority for 2010.

Eitan Linker, Emoze CEO

Andy Tow, Avenir Telecom managing director:

Avenir is, we believe, the only distributor that has reduced churn to single digit figures. In October 2009, my company and our dealer base reduced customer churn on O2 connections to just 8%. It had been steadily declining each month across 2009 and is set to fall even lower in the first quarter of 2010. This single digit result is believed to be the lowest sustainable figure achieved by any distributor of Avenir’s size in the UK mobile marketplace.

Churn has been the industry buzzword all year... We’ve been working tremendously hard with our dealers on this, specifically with our dedicated customer retention team, which is about to celebrate its first anniversary. It’s a whole team of staff that works with both dealers and operators, to tackle specific customer loyalty issues.

They work both proactively and reactively. On the reactive side, they can quickly set up manufacturer visits to customers should they be needed. On the proactive side, they work with operators and dealers to specifically identify and market to wavering customers, both in and out of contract.

We also have ongoing training programmes to help dealers minimise churn and maximise retention. And last summer, we dedicated a whole edition of our customer magazine, Talking Shop, to these issues, covering everything from the 80/20 rule, to tips on building customer loyalty programmes.

Andy Tow, Avenir Telecom managing director