Entanet has raised the question of whether bargain broadband pricing is behind the higher levels of customer churn that many ISPs are now starting to experience.
In the latest blog post on its opinion website – see www.enta.net/opinion/2015/07/08/bargain-broadband-pricing-driving-customer-churn/ – the company’s Head of Sales, Stephen Barclay, highlights churn as a major challenge for many smaller service providers.
“The pricing war in the consumer broadband market continues apace with lower and lower headline costs being announced every week. It’s becoming increasingly difficult for smaller ISPs to compete within this market, if you plan to compete based on price alone, that is. Realistically, only the big providers with large-scale customer volumes can succeed with this strategy, and even then it’s not necessarily viable in the long term.”
Cutting prices to win business can mean corners get cut on service, he notes, which can cause more problems. “At the end of the day – you get what you pay for and this can often lead to customers receiving a less satisfactory service, which in turn breeds dissatisfaction and generates even more churn. It can easily become a vicious cycle for suppliers who will inevitably find themselves struggling to compete with ever diminishing margins.”
Barclay also refutes the notion that broadband has already become a commodity. “The truth is, broadband isn’t all about price…factors such as reliability, good quality support and a robust network still have a major part to play. That’s why we advise all of our resellers against entering the price war – it’s just not viable in the long term.”
He advises ISPs to focus on differentiating themselves and adding value and targeting customers that are more aware of the potential benefits of using a quality service and a supplier that is focused on their needs.