* In 2003, excess customer churn cost European mobile operators EUR4.5 billion in unnecessary expenses and EUR5.6 billion in lost revenue – equivalent to 8.6% of total mobile revenues
* Controlling churn so that rates are lower than competitors’ is an effective mechanism to continue to grow revenues in a saturating market
* Analysys warns that mobile operators must pursue cost-effective churn-management strategies that suit their market position, or face significant loss of market share over the coming years
CAMBRIDGE, UK, January 27, 2005 – Unnecessarily high levels of customer churn is costing Europe’s mobile operators billions in lost revenues, according to a new report published by Analysys Research, the global advisors on telecoms, IT and media (www.analysys.com). In 2003, churn above best-practice levels cost European mobile operators EUR4.5 billion in unnecessary expenses and EUR5.6 billion in lost revenues – equivalent to 8.6% of total mobile revenues.
The report, Retaining Customers and Minimising Churn: strategies for mobile markets, concludes that a low churn rate relative to those of competitors in mobile markets is a crucial factor for continued success. “We have observed churn rates as different as 17% and 35% in the same market,” explains Eddie Murphy, author of the report. “Control of churn relative to the rest of the market will become a key differentiator between the successful operators and the 'also rans'.”
With Western European markets becoming saturated and many countries seeing the arrival of additional competition in the form of 3G new entrants and/or MVNOs, the management of churn is even more important now than ever. “How good operators are at retaining their existing customers will be critical to determining which operators will weather the storm and which operators will go into decline,” says Murphy.
The report evaluates a range of strategies varying in cost and effectiveness, including the use of account managers, retail outlets, brand-building, handset upgrades, bundling, special offers and longer contract terms. It points out that operators need to take different approaches to churn depending on circumstances. For example, large, established operators will choose from a range of defensive strategies, while new 3G entrants need to aggressively build their customer base, but will be attracting customers with a willingness to churn.
Retaining Customers and Minimising Churn: strategies for mobile markets exposes the powerful effects of churn, revealing how their performance in this area relative to that of competitors can significantly affect the fortunes of operators. It also looks at some real-world examples, showing that better-than-average churn performance is associated with superior overall operator performance and describing how even a short-term increase in churn can have long-term consequences for operators. The different techniques used by operators to retain customers are reviewed and analysed for cost-effectiveness. Finally, the report examines the churn strategies of different categories of operator and makes recommendations for the most appropriate of these for each type of operator.
For more information, telephone Analysys on +44 (0)1223 460600 or email email@example.com.
About Analysys (www.analysys.com)
Analysys provides strategy and management consultancy, information services and start-up support throughout the telecommunications, IT and media sector. Its grasp of market dynamics, coupled with creativity, rigour and renowned objectivity, enables Analysys to consistently exceed the high levels of quality and innovation that its clients expect. The company has over 130 staff in offices in Cambridge, London, Glasgow, Madrid, Milan, Paris, San Francisco and Washington DC, and works with associates in Auckland, Melbourne and Vancouver.
Recent reports include:
* Making a Success of the Mobile Content Value Chain (December 2004)
* The Role and Impact of WiMAX and Proprietary BWA (November 2004)
* Viable Business Models Point to Big Opportunities for Public WLAN (November 2004)
* TV and Video Services on a Mobile Phone: the killer application for 3G? (September 2004)
* Delivering high-speed mobile Internet/intranet services: the role for 3G and public WLAN (August 2004)
* The Business Case for Broadband Entertainment (July 2004)
* 3G Launch Strategies: critical decisions on services and technology (June 2004)
* Western European Fixed Telecoms Markets: forecasts 2004–2009 (June 2004)
* Spectrum Trading and Liberalisation: new threats and opportunities for telecoms business models (June 2004)
* The Road to Fixed–Mobile Substitution Starts with 3G (April 2004)
* Western European Mobile Forecasts and Analysis 2004–2009 (March 2004)
* VoIP in the US Market: services, business models and regulation (March 2004)
* Strategic Options for Fixed and Mobile Operators in Central and Eastern Europe: scenarios and forecasts (February 2004)
* Vodafone live! versus i-mode – lessons and prospects for the rise of global wireless services (February 2004)
* Delivering the Broadband Home. New fixed and mobile services and devices: forecasts 2003–2008 (January 2004)
* Scenarios for the Evolution of the Wireless Industry (December 2003)
* The Future of Personal Videotelephony (November 2003)
* Operator Strategies and Key Performance Indicator Benchmarks (December 2003)
Media contact (for author photography, executive summaries and interviews)
Tel: +44 (0)1223 460600
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