8/27/2008 11:16:00 AM
Percentage of customers churning has halved this year
The percentage of customers churning from contracts halved in the first quarter of 2008 compared with the same period in 2007, according to the latest industry figures.
GfK’s customer acquisition report is the first indication that the major operators’ priority this year to stop contract customers leaving their networks is paying off.
The report showed that contract churn dropped from 26% in the first three months of 2007 to 13% in the same period in 2008.
The percentage of customers churning on prepay also more than halved, down from 28% in Q1 2007 to 11% in Q1 2008.
It comes after operators started offering discounted deals to customers threatening to leave the network. The one major cost has been that the drop has hit many operators’ margins.
The findings are likely to please O2, Vodafone and Orange, as they have battled to hold off the threat from 3 and T-Mobile, which are trying to prise contract customers away from rivals.
Fighting churn is a priority for operators due to the saturated market state, especially in the contract area. Recent GfK figures showed that only 3% of customers taking on contracts are new to the market.
T-Mobile addressed the issue this month by giving its store staff the same powers as its retention teams in call centres to keep customers from churning. O2 and Orange are looking to follow suit, and operators are developing their store systems to enable staff to make deals.
Value and coverage were the main reasons that customers decided to churn. Fifty-two percent swapped networks to find better value, and 23% churned because they were receiving poor signal.
GfK analyst Ben Hunt told Mobile: ‘Our figures do appear to show that levels of churn are proportionally decreasing. As ever the biggest driver for that appears to be customers seeking better value.’
GfK’s figures showed a large increase in how many customers are churning to find a cheaper deal. Thirty percent of customers churned because of ‘overall price/cost of package’ in the second half of 2007, compared with 51% in the first half of 2008. Worsening economic conditions appears to be a key factor behind the trend.