Mobile Operators Need New Metrics to Assess Customer Churn

As mobile customer retention remains a key focus in both developed and emerging markets, operators should assess the value of churn within the context of key segments, according to a new report from Pyramid Research.

"Churn rates have been an important performance indicator in the wireless industry; some operators believe its value has lessened in recent years, given changing market dynamics, such as the high incidence of multi-SIM ownership and the provision of free SIMs and airtime," says Jan ten Sythoff, analyst-at-large for Pyramid Research. "For example, the main trend for churn rates in developing prepaid markets, such as many in Africa and Asia, is upward, driven predominantly by the arrival of new entrants. In other countries, by contrast, market maturity, competitive stability and improved subscription management is bringing churn rates down."
"For churn to continue to remain relevant, it needs to be reprioritized within organizations and it should not be discarded as an indicator altogether," ten Sythoff explains. "Intense levels of competition do mean that its priority should be lowered, but this is likely to be a temporary situation as markets mature and consolidate. Moreover, churn remains a key parameter of a subscription's overall lifetime value when tracking high-value segments, particularly when high subsidies are involved in order to acquire the customer, as well as in the evaluation of services and pricing options for operators."