The average mobile customer switches service provider every 27 months, more than twice as frequently as a decade ago. According to new research from Strategy Analytics, “Wireless Operator Performance Benchmarking, Q4 2011,” global mobile customer churn – customers switching providers each year – reached 44 percent at the end of last year, its highest ever level.
“Prepaid churn has really been hit by promotional SIM card activity in developing markets, making customer loyalty virtually obsolete in some countries”
Average prepaid customer lifetimes have halved over the last 5 years, to only 17 months, according to Strategy Analytics Wireless Operator Strategies (WOS) research which tracks the operational and financial performance of over 215 mobile operators, accounting for over 75 percent of global subscribers. By contrast, average postpaid customer lifetimes of 67 months have improved from the depths of the global recession in 2008/09, since customers show an increased propensity for upgrading with their current provider instead of switching to better deals elsewhere.
“Prepaid churn has really been hit by promotional SIM card activity in developing markets, making customer loyalty virtually obsolete in some countries,” commented Phil Kendall, Director, Wireless Operator Strategies, and author of the report. “For example, prepaid churn in Asia-Pacific is nearly 100 percent per year. It doesn’t cost much to push new SIM cards into the market, however, operators would still benefit by promoting targeted offers to existing users which build longer-term, more valuable, customer relationships.”
Sue Rudd, Director, Service Provider Analysis, added, “With smartphone subsidies stretching operator resources, it is the postpaid market where churn is more expensive to manage. Operators are finally looking at new device purchasing models, like installment plans or leasing, that can alleviate pressure. Of course, consumers are ‘addicted’ to the discounted handset model—and it will be difficult to change this.”
Source: Business Wire