Churn rates in Western Europe are falling due to a combination of prepaid to contract migration and rising smartphone penetration, research firm Wireless Intelligence claims.
The average churn rate in the region hit 2.3% in 2010, down from an all-time high of 2.4% in 2009, with the UK registering the highest level of 2.9% and Switzerland the lowest at 1.1%.
Senior analyst Matt Ablott said the declining churn rate is “directly linked to increasing smartphone penetration, which has allowed operators to lock-in high-value customers.”
Apple’s iPhone was a major contributor to churn reduction among carriers that won exclusive contracts to carry the first model in late 2007. Wireless Intelligence notes churn rates at O2, Orange France and T-Mobile Germany fell to between 1% and 1.2% during the exclusive period, which bucked the industry trend towards higher churn.
The firm hammers home the point by revealing that Vodafone UK’s churn rose from 2.8% to 3.4% during rival O2’s iPhone exclusive period, while Orange saw its rates grow from 2.2% to 2.4%.
However, the game is now changing, particularly in the UK where the combination of Orange and T-Mobile’s business has created a new market leader. Wireless Intelligence takes a reduction in churn at Everything Everywhere and Vodafone as evidence that customer retention is now an important focus for carriers in the country.
While smartphones have done much to reverse the trend of growing churn rates, Wireless Intelligence notes that successful carriers have backed up their high-end device portfolio with other customer loyalty schemes.
Rolling monthly SIM-only deals are now commonplace along with loyalty programs for high-value customers covering concert tickets, early handset upgrades and even personal account managers.