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Operator Churn
One of the frequent topics of discussion in the mobile tech world is how operators can increase revenues. Statistics have been showing a plateau in voice usage for nearly a year now. With some countries having reached a theoretical saturation point for mobile uptake (over 100% is typical for wealthy countries), it would seem that recruiting new (cell plan naive) customers is nearly impossible. Which means that an operator’s new customer growth will come by leaching customers from other operators, right?
Well, customer churn is also very high in the mobile industry (I’ve seen numbers as high as 20% per year). “Churn” here represents the process of customers switching carriers when their contracts expire (or even before). Why do customers churn? Often, it’s because of poor service, not surprisingly.
The guys over at SMSTextNews have often griped that service providers seem to be more interested in recruiting new customers than in enticing existing customers to stay on board. This is odd, because you’d think that it would cost less to retain a customer than to recruit a new one (existing customers should require less advertising dollars and already recognize the brand).
Here’s a classic case: my U.S. phone is a Blackberry. I bought it via Cingular about two years ago, in great part because Cingular was the only carrier with rollover minutes in their plans. Since I’m in the U.S. only sporadically, having my minutes roll over is extremely valuable. With the two-year point approaching, I’m ready to think about not only extending my plan, but upgrading my Blackberry device.
My first stop was Wirefly.com, a site through which I have had previous positive experience. On the splash page, they were advertising a Blackberry Curve through AT&T (who bought Cingular a while back) for $75, free after rebate (I don’t count rebates — too much fine print). When I then clicked on a link to price the same plan with the same phone as a contract extension, I was offered the phone for a price which came out $50 higher. Huh?
That’s crazy. I’m poised to make the decision as to whether to buy the phone from AT&T or T-Mobile (where the model has WiFi but not GPS)… shouldn’t AT&T be trying to woo my business?
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