High Risk Wireless Customer Segments.

Telephia announced key findings from its most recent churn study that highlight the need for carriers to employ targeted segment marketing as part of their strategic customer retention efforts. The new report focuses on user segments that present a high churn risk to carriers and addresses how the industry can better align retention incentives with customer expectations to more effectively reduce churn.

Telephia and Harris Interactive jointly conducted the study, based on a survey of more than 34,000 wireless users in the top 35 U.S. markets.

The report’s findings on churn risk among the young adult age group illustrate clearly the need for segmentation. Young adults (ages 18 to 24), who have increasingly attracted the attention of carrier marketing campaigns, show churn risk percentages that vary substantially depending on the user’s service provider.

Telephia found that 22 percent of young adults nationwide pose a high churn risk (“high risk”) to carriers. However, the percentage of young adults at high risk to churn ranged widely among carriers (from 15 percent to 37 percent). Other age segments that Telephia studied showed lower overall churn risk than young adults, but risk levels again ranged considerably among carriers.

The striking range of churn risk for all age groups suggests that carriers should develop segment-based programs to reduce churn that consider the unique circumstances of their own customer base relative to their competition rather than employing broader, “catch all” marketing efforts.

“As the industry increases its focus on reducing churn and increasing profitability, it is looking for new and innovative ways to retain customers – a much less expensive proposition than acquiring new ones,” said Mick Mullagh, CEO of Telephia. “Carriers need to combine a sophisticated understanding of their own high risk customer segments with competitive, market-level information on satisfaction, churn rates, perceived and actual network performance and other key variables to create a comprehensive and effective model with which to manage churn.”

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In addition to focusing on strategic issues relating to churn, the Telephia/Harris Interactive report also addressed tactical approaches to customer retention. Telephia asked all young adult users who had switched providers in the last year what incentives would have motivated them to remain with their carrier as well as which had been offered. The biggest difference between incentives offered and those desired was for an account credit – 43 percent of those offered an incentive to stay were offered an account credit, but only 13 percent described that as a motivating incentive to remain with their carrier. Another large disparity appeared for the offer of a more flexible service plan. While carriers proposed that to only 7 percent of young adults, considerably more (18 percent) reported that as a motivating incentive.
These results indicate that carriers can perhaps be more successful in their direct customer retention efforts by segment and more directly align incentives with customer perceptions and expectations.

For the study, Telephia employed a proprietary analytical model for defining a user as high risk. The model takes into account, among other factors, a user’s likelihood to switch providers in the next year and whether the user would choose a different carrier than their current provider if signing up for service today.