Have you been in a situation where you have lost customers to some other company? A large number of organizations today rely heavily on retaining their existing customer base and a large part of the revenue comes in from this sector. All industries suffer with “Churn”. It is seen more in the Satellite TV, telephone and internet providers where the percentage of people switching from one provider to another is significant month to month. A “churn” with respect to the Telecom industry, is defined as the percentage of subscribers moving from a specific service or a service provider to another in a given period of time.
Research shows today that the companies these companies have an average churn of 1.9 to 2 percent month on month and annualized churn ranging from 10 to 60 percent.
Reasons for a Churn
An organization loses its customers to its competition for various reasons. What mainly attracts customers to go ahead with a shift is attributed to price of the product and its quality. This is true for a Telecom industry as well. Churn of 10 to 60 percent in any company is a big number which can affect the company’s overall growth. The reputation of the company also goes down in the market if the percentage churn increases year on year. Future business gets affected and in turn your entire sales engine fails. Many companies have gone bankrupt and incurred heavy losses due to a large percentage of churn. You lose not only revenue generated by these customers but also the resources you have invested for them. However, for the customer to be retained, it is very important to also measure customer satisfaction. Many researches show that plenty of customers switch to a different provider because of the lack of satisfaction. Value added service is another reason for Churn. Telecom companies have started a new offering called Triple play combining the TV, broadband and the phone offering as compared to the traditional model of just the phone services. This is seen as a value add to retain customers. The Triple play not only helps retain customers but also increases the Average revenue per user ( ARPU) directly contributing to the revenue of the company.
Tips to reduce Churn
- “After sales” service is a key to retain customers. Telco’s should categorize their customers based on the ARPU into different buckets and should have the privileged support based on the category as done in the banks today. This will have an improved customer satisfaction as the users will experience a special privilege.
- Customers should be communicated with the new services offering based on the usage analysis and trends and should be given proactive information on the plans which will benefit the customer.
- Now almost all providers are offering the Triple play service as a combined offering and there is a need for the Telco’s to look at an alternative for the value added service. Telco’s have to come out with new value added services with differentiators to retain customers. The Triple play effect is no longer going to be a value add and will not work as a differentiation in the market.
- Effective communication is one way to reduce churn. Being proactive in addressing difficulties and issues faced by your customers not only helps in building trust and reliability but also ensures a strong working relationship.
Suresh Kanniappan, Heads the Global Practice for Unified Communications in Happiest Minds Technologies.
Suresh has about 17 plus years of IT experience and have performed various roles in solutions and platform development.
Some of the platforms he has developed on open source technologies are focused towards End user experience on unified communication
