Research Notes

How will churn develop on the mobile broadband market?

For mobile broadband providers, churn (customers switching provider) is a central parameter, as it gives an idea of how competing mobile providers are doing. But how will churn develop on the mobile broadband market – will it be as high as it is on the mobile market, or will it be as low as it is on the broadband market?
The changes currently happening on the mobile broadband market, network providers have the possibility to influence how churn will develop on the future mobile broadband market.
One important area that influences churn is distribution loyalty. From the start one should focus on each individual distribution channels loyalty. If the distribution channels are not loyal it is very difficult to attract loyal customers. Good customers are acquired by good distribution channels, while customers with low ARPU and high churn are acquired from poor distribution channels. Today, business models are still being used in the telecom industry that give mobile dealers no incentive to offer customers a service that can help ensure that those customers have a higher mobile consumption or become more loyal. On the contrary, many mobile dealers are indirectly rewarded by the telecom providers for creating churn and are not rewarded for acquiring high consumption customers with a long lifespan.
Mobile broadband providers could let a larger share of the mobile dealers commission be dependent on the quality of the customers the dealer acquires. The providers’ payment to the dealer should therefore be more dependent on how lucrative the customer is to the mobile broadband provider. In other words a mobile dealer should receive a higher commission for acquiring a high spending customer, rather than a low spending customer. In that way, the mobile dealer will have an incentive to make a larger effort to attract high ARPU customers that have a low churn.
Mobile providers can also keep churn at a lower level for corporate customers by using system integrators that sell various services to companies. There is no doubt that over time, mobile providers will start bundling their products with various types of telecom services from different types of system integration companies.
The advantage of selling mobile broadband via a system integrator is that they can bundle their services with the services offered by the mobile broadband provider, thereby making the product less price sensitive. Likewise a bundling of access and services will most probably result in a lower churn in these customer segments, as a customer will need to switch both IT provider and access provider at the same time. This is a cumbersome process that might result in many corporate customers retaining their providers, or delaying changing providers.
We have thoroughly examined and analysed these – and many other issues – in our new report “Successful Strategies in the Mobile Broadband Market“. The report is therefore an efficient tool for mobile broadband providers in their efforts to create and implement an optimal strategy.

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