Saturday, April 15, 2006

Mobile Phone Customer Churn
A Huge Marketing Problem

According to a recent Forrester report release, nearly 98 million US households will have a mobile phone by 2010. That's the good news for mobile phone carriers.

The bad news is bad indeed -- 24% of US mobile subscribers switched providers between 2004 and 2005, and another 16% plan to switch in the next two years.

Number portability, commoditized mobile offerings, and lifestyle-based service providers will continue to create churn, going forward.

The likelihood that these lost customers will return is very low ... at least until they have made the rounds between providers and learned that the grass is not necessarily greener on the other side. So that means for this industry, marketing costs will be astronomical.

Wouldn't it be a better investment to focus on retention instead of acquisition.

Get to know each customer and help that customer maximize use of the phone to meet the customer's individual needs. Communicate around the issues that the customer has indicated are most important -- not price but service. Most mobile phone users I know use only a small percentage of the features available to them ... either don't know how or don't care to use them. Either problem is an opportunity to a truly customer-centric marketing organization.

This is a lesson all of us who sell complex products or services could learn from the mobile phone industry so we don't some day find ourselves in the same boat.


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