Approximately 36% of wireless 'phone customers in the USA switch service providers every year, costing the providers billions of dollars, according to American Management Systems (AMS). The answer, however, may lie in holistic churn management strategies, says a recent report published by the Yankee Group.
The Yankee Group report, International Wireless Churn Management Research and Recommendations, reveals that wireless companies can improve the level of customer switching by adopting a more holistic churn management strategy, despite the industry having not seen incremental improvements in churn levels for the past three years.
The report also provides insight into the causes of, and cures for, customer churn in the wireless industry. Recognising AMS's solutions and systems for churn management, the report notes that the firm is well positioned to help wireless operators that have an existing installed base of churn-management products but are looking to rework their processes.
Churn around the corner
David Meredith, managing director of communications, media and entertainment for AMS, explained: "Seeking solutions for customer churn management is a top priority among wireless operators around the globe, especially as the industry prepares for the upcoming implementation of WNP (wireless number portability), which is expected to have a significant impact on customer loyalty and churn."
The report surveyed seven leading wireless operators in the US and Europe in order to analyse the approaches and trends they have employed to stem the historically high customer churn rate. It showed that major wireless operators are beginning to embrace the idea of integrating software solutions with business intelligence - a major component in adopting a holistic churn management approach, according to AMS.
One challenge, however, has been finding suppliers that can deliver holistic solutions that integrate software and systems across the entire enterprise. "Considering the vast resources being committed by the wireless community to reduce customer churn, the report provides a roadmap of where mobile operators can turn for vendors and solutions as they implement top-to-bottom churn management processes," said David Hawley, senior analyst for the Yankee Group.
The study identified three major reasons why wireless operators have seen only modest success in their churn management initiatives so far:
- Historically, operators have not effectively used their own internal data to analyse churn behaviour. Only recently have they started segmenting their subscriber base for churn management.
- Operators have not taken a holistic approach that integrates business intelligence with operational software. They have collected churn analysis intelligence but have not executed the recommendations.
- Operators have attempted to solve a multi-factor problem with single-factor solutions. For example, wireless companies have historically used credit scoring as the leading predictor of churn. Most wireless operators today incorporate many subscriber variables (50 - 300) in their predictive models.
Yankee Group's six month study also identified and researched leading wireless churn management solutions and providers, along with the similarities and differences between US and European mobile operators in terms of churn management processes and software adoption.
While the European and US providers use many similar processes and technologies, the report found that European mobile operators have taken a leadership position in the use of profitability metrics to determine the value of subscribers. They have also been more creative in communicating with their subscribers: Many use short message systems (SMS) to leave text messages directly on customers' telephone handsets. According to the Yankee Group, greater competition (in the form of more wireless subscribers and competing mobile operators) has been a key driver of Europe's leadership position in churn management.
An executive summary of the report has been made available (as an Acrobat PDF document) from the AMS web site, at http://www.ams.com/cme/pdfs/yankeechurnstudy.pdf
For additional information:
· Visit Yankee Group at http://www.yankeegroup.com
· Visit AMS at http://www.ams.com