By Andy McCue, 28 January 2005 00:05
NEWS High customer churn and poor business offerings are costing European mobile operators billions of pounds a year in lost revenues, according to two separate industry reports.
Retaining Customers and Minimising Churn by Analysys Research claims European mobile operators lost €5.6bn in revenues and €4.5bn in unnecessary expenses in 2003 due to high levels of customer defection - equivalent to 8.6 per cent of total mobile revenues.
Churn rates between operators varied widely with the low best practice benchmark figure set at 12 per cent compared to some as high as 35 per cent.
Eddie Murphy, author of the Analysys report, said customer churn is posing difficult challenges for operators.
"People feel there are better deals elsewhere and operators are contacting people with better offers. Customers either want more for less or more for the same. There is no such thing as customer loyalty anymore," he said.
But the tactics for dealing with this are different depending on whether the operator is established in the market or a new entrant.
"If you have an established presence you want to suppress churn. These operators are looking at extended contracts of 24 months so that the ability to move is limited," said Murphy.
For new 3G entrants such as 3 in the UK, the challenge is even more complex, according to the report.
"One of the biggest challenges is for 3 to hold onto customers it wins. It has a customer base that has proven it is willing to move. It is a serious challenge to hold on to them," Murphy said.
A separate report from market researcher Datamonitor claims mobile operators are selling business customers short with their corporate data offerings.
Unless a mobile operator makes a "dramatically bold move" by acquiring an IT services capability, they will simply be left fighting it out for low-value mobile email implementations and undercutting each other on price, according to the report.
Richard Clifford, analyst at Datamonitor, said there is little opportunity for mobile operators to differentiate their services unless they move up the value chain by making an IT services acquisition.
"Mobile operators are increasingly targeting business customers, though corporate data solution offerings are not what could be termed comprehensive. Although they are all trying to move up the value chain, they simply don't have the necessary skills to do this effectively and are left competing purely on price," he said in the report.
Comments
There are 3 comments. Join the discussion
1. Simon
Perhaps customers would churn less if they were treated with the basics of customer service - like honesty and respect.
Quite frankly, my own personal experience is that I'll pick an operator partly on the offering, and mostly on how badly I expect to be treated by them. It's now a year since I last changed, and the previous company (for whom I hope the future isn't bright) is still pursuing me for a debt that only exists on their accounts because of their blatently bad customer services, lies, and illegal activities - yes they have broken several laws and when their debt collection agency does finally take me to court (if they are daft enough to do so), instead of just harrassing me, I shall take great delight in showing them up for what they are - a bunch of incompetent crooks.
Currently I'm with O2, well it is over 10 years since I left Cellnet (calling them a bunch of incompetent crooks). The price/product was right, but unfortunately their customer services hasn't got any better.
So when an operator comes up with a fair product, at a fair price, where it's customer services don't lie to the customer as a matter of policy, and where they don't add to the bill and justify it through the small print - then, and only then might they enjoy a stable customer base.
2. Rob
If the mobile operators did enough to keep us loyal then prehaps customer loyalty would exist. Most customers usually get shafted by their mobile operator through offering services that usually fail and have poor support, lack of knowledge by the customer service teams and constant problems through lack of internal communication within the moblie operator.
So they have decided to come up with another plan to shaft us by doing 24month contracts, making PAYG more profitable for sure, is that the real reason for that idea. PAYG demands less in support plus they can get away with charging more for calls rather than cutting each others throats with tariff wars.[sorry that last bit about PAYG was just a paranoid rant]
3. Andy W
The operators have shot themselves in the foot by subsidising phones to such a huge degree.
People treat them as disposable items and expect a new free one every year.
If a network reduced the price of the tarrifs/charges and you didn't have to take a locked subsidised phone as part of the deal I'd use my phone more and they'd make money on the phones.