Customer churn remains a significant issue for mobile operators as a wealth of choices and easing of porting hurdles have clipped consumers’ loyalty toward their current provider.
This issue was brought to light in a new report from Ovum, which found that telecom operators worldwide could lose up to half of their current customers due to churn over the next year. That warning followed research showing about one-fourth of current mobile customers “will definitely change providers, with another [one-fourth] indicating they may do so.”
The survey included responses from more than 15,000 consumers and 2,700 enterprises in 15 markets around the world.
While many operators are happy with postpaid churn levels below 2% per month and prepaid levels less than 5%, those numbers extrapolated over a one-year period have operators losing one-fourth of their lucrative postpaid base and nearly two-thirds of their prepaid base.
One factor cited as crucial to consumer loyalty was mobile broadband services, with the report finding that 37% of consumers surveyed saying they have either left or plan to leave their current provider due to slow connection speeds. That need for Internet connectivity was also highlighted by responses to the importance of being “online” compared with other consumer activities.
“When we asked consumers to rate a range of activities on a scale from ‘essential’ to ‘unimportant’, browsing the Web came top, with nearly six out of 10 consumers rating it as essential,” explained Angel Dobardziev, practice leader at Ovum. “By comparison, an old favorite such as watching TV was rated by only three out 10 consumers as essential, scoring as less important than reading the news (50% of consumers), reading a book (45%) and listening to music (42%).”
Digging into the survey found that consumers in markets such as India and South Korea were more likely to churn than those in Japan or Germany. In addition, consumers using one of Apple’s iPhone devices were “much more likely to churn than those with another phone, and mostly in order to find a provider with faster mobile network speeds – again underlining how crucial the quality of broadband experience is to consumers.”
Overall, Ovum said mobile operators “must deepen their understanding of consumers’ propensity to switch providers, not just in their own market, but more broadly given that global trends permeate national borders.”
“This must be combined with an evaluation of drivers for customer churn across different segments, markets and providers, with a view to gaining insight on the best, and worst, practices – despite differences in local market contexts and levels of competition,” added Dobardziev.
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