As broadband markets mature, churn becomes the critical metric for network monetization. Studies have shown that cost and billing are a key churn driver, representing 40% of subscriber attrition. Other studies have shown that half of these subscribers feel they are not receiving “value for money” and hope to find that value by moving to another service provider.
So how do service providers effectively address “value for money” concerns to save the customer? In most cases, operators are limited to speed and price offers but both are ineffective for different reasons. Offering the customer a speed increase may not be effective if the customer is perfectly happy with their current network performance. Offering the customer a temporary discount on price simply pushes the churn event out by a few months.
“Value for money” concerns can be better addressed with usage based plans that reflect the customer’s actual service needs. By providing internal loyalty and retention teams with insights into historical customer usage patterns, they can match customers to lower cost quota-based plans. This strategy can sustainably improve the churn save-rate while still meeting service profitability objectives. We have seen a major European MSO reduce churn by up to 5% using this retention tactic.
Retaining the customer on a usage based plan not only retains their current revenues, it creates long term opportunities to offer additional value-added services as their usage patterns change. By storing and analyzing subscriber usage data, operators gain valuable insights that can help optimize network investments and new service innovation. Usage based retention plans are an excellent starting point for service providers seeking to create more value for customers and their shareholders.
Learn more about how usage based services can reduce churn and increase ARPU in our Usage Billing Best Practices whitepaper.