When we work with broadband and pay TV service providers to develop and execute churn reduction strategies, the first step is to categorize the different reasons for customer loss. There are churn reasons that are generally perceived as “controllable” — customers lost to competition due to service issues, pricing, features/functionality, and poor customer experiences — and those that are viewed as “uncontrollable”, such as when a customer moves.
Customer Moves: That “Uncontrollable” Churn
By SooIn Yoon and Samuel Kornstein
When we work with broadband and pay TV service providers to develop and execute churn reduction strategies, the first step is to categorize the different reasons for customer loss. There are churn reasons that are generally perceived as “controllable” — customers lost to competition due to service issues, pricing, features/functionality, and poor customer experiences — and those that are viewed as “uncontrollable”, such as when a customer moves. Most churn reduction strategies rightfully focus on the former category. They are designed to identify actionable opportunities to retain customers by improving the competitiveness of products/services across the end-to-end customer experience.
However, that doesn’t mean that customer moves should be overlooked. The most obvious reason is that a share of customers may move to a new household in a region covered by their former service provider. In these instances, it’s critical for service providers to have a retention strategy in place. These infrequent life events offer subscribers a good reason to reevaluate their satisfaction with their former service provider, and any barriers to transferring service could bias the customer towards a competitor. To minimize this type of loss, every service provider should have a comprehensive strategy to identify and retain moving subscribers.
What’s less frequently considered is that consumers move at different rates in different geographic areas. At one extreme, in dense urban areas with an abundance of college students and young professionals, the average length of residence in a given household could be as short as a few years. Alternatively, families in some more rural areas can move on average every 20 years or more.
To help illustrate some of the differences in moving trends across the country, we developed an interactive visualization that shows the average length of household residence by zip code across the continental US. Select a specific state from the drop-down menu to drill into more granular geographies:
These differences in moving rates are important for a couple reasons.
First, a service provider’s mover churn could meaningfully vary based on where their subscribers are located. Understanding this breakdown can help determine whether churn is too high relative to industry norms (i.e., there’s a problem that needs to be fixed), and the right amount to invest in mover retention programs.
Secondly, the expected ROI or customer lifetime value from a new subscriber will actually be different based on where that subscriber lives. This means that higher acquisition costs may be justified in areas where households rarely move, and areas with frequent movers may only be profitable with very low acquisition costs or high margin products.
While managing movers is only a small piece of the churn equation, understanding the cost benefit for acquiring subscribers in different geographies can inform thoughtful marketing and sales channel strategies that help optimize value creation.<>
Contact Cartesian about using churn analytics for your business.