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Study of churn, part I

Churn, aka people switching mobile operators, is a major challenge for the industry. As we all know, acquiring new customers is much more costly than keeping one’s existing customers. There are various reasons why people switch providers, for instance, after an aggressive marketing campaign, due price competition, or due to sheer bad experience in the provided service. This latter is very interesting to us at Netradar because we have the data that can shed light into peoples’ experience and how much quality matters.

In a first study in what is to become a series of analyses into churn and quality, we looked at mobile users from three competing mobile operators. Here is what we found out in this very initial study, just scratching the surface.

Average churn calculated for one year was around 22%. Yet, there were huge differences, one of the mobile operators had a churn of 17,3% while on the other end of spectrum, one competitor had a yearly churn of nearly 28%, and 21% for the third player in the market.

Figure 1: Where did people switch to ?

Figure 1 shows where people switched to. Let’s call these mobile operators simply A, B and C. Now, A lost 55% of it’s leaving users to B, and 45% to C. For B it was an even split as customers switched fifty/fifty to A and C. Operator C had a very interesting split, 36% went to A and 64 % to B, thus, there was a clear movement from C to B – the reason might be found in our datasets later.

Figure 2: How many users got a better network quality after switcing providers?

Now let’s add a further dimension, quality, as we like to measure it with the Netradar technology, i.e., how well does your provider match your needs in terms of data connectivity. And here it gets hugely interesting, as shown in Figure 2. On Average 53% of people switching providers had a better experience with the new operator, and consequently 47% would have been better off, in terms of network quality, with the old operator. Yet, the differences between operators were huge…

  • If you were a customer of operator A, most people leaving got a worse quality with the new operator. If you went to provider B, your changes of getting a better network were 49%, and going to provider C was even worse, only 46% of users got a better service. So, in general leaving operator A was a bad idea – if quality mattered to you.
  • For operator B, the story is very, very, different. People leaving for operator A gained a lot as 66% of people got a better quality. People leaving for C were also clearly better off with 59% having a better network with C than it was with B.
  • Finally, operator C had a mixed situation. Leaving C to go for A was a good idea, as 63% of users received a better network quality as a result. Leaving C to go to B was a slightly bad idea with 49% of people getting a better network (and consequently 51% of the cases you would have been better off with the old provider).

So, in summary, looking at these three providers, operator A had the best network and leaving it to go to others was a mostly bad idea. Leaving provider B was a very good idea as most users got a better network no matter who they chose as the new home. Provider C was also, in terms of quality, in a better shape than B, but slightly behind A.

A follow-up question came up: do people switch operators due to lacking quality, or based on marketing? If they make the decision based on quality, do they actually get a better deal in the new home?

We will look deeper into this topic in later posts, so stay tuned.