Up to 15% of Churn Occurs in First 3 Months of Service

Professional services firm Cartesian have asserted that ‘early-life’ churn can represent as much as 15 percent of lost accounts in a recent article on their website.

Another important topic for service providers to proactively manage is early-life churn, often defined as customers who churn in their first three months of service.

In our work, we find that for some service providers early-life churn can account for 10-15% of all customer losses – most of these customers had an initial experience that was so bad that they decided to switch to a competitor.

Yikes! There will be a lot of pain involved in signing up a new customer, only to lose them soon after. As Cartesian points out, early-life churn will probably be a financial drain on the business, because of the up-front costs involved in gaining and provisioning a new customer.

It is not hard to work out why customers want to leave telcos. Anybody who has had a poor experience soon after signing a contract with a new supplier will know how they can feel exploited. A big business makes a lot of promises to entice you to switch to them, but promises about service and prices are not kept in practice. Whilst it is easy to put yourself in the shoes of a disgruntled customer, telcos can be oblivious to what they are doing wrong. Though we may talk about monetizing data, it seems we are incapable of joining the dots when reviewing what upsets customers. As Cartesian put it:

Identifying the exact causes of early-life churn can be difficult, as the process generally requires the integration of many disparate data sources and a robust statistical analysis of the trends.

Saying the task is difficult is the same as admitting telcos do not routinely bring data together to understand the customer’s experience of our business. It seems our ‘big’ data is a lot smaller than it should be.

The Cartesian piece on early-life churn can be found here.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.