The challenge of churn

Customers will still change service providers to save money, even though they are happy with their current level of service. That's one of the findings of In-Stat's latest survey of U.S. consumers. The spring survey of 752 consumer households found 10% ready to jump ship, even though they reported high satisfaction with their home phone, long-distance, wireless, VoIP and Internet service.

The big churn factors remain price and relocation, said Amy Craven, senior analyst with In-Stat and author of "Avoiding the Churn Burn." Only when it comes to Internet access do consumers seem to care as much about the quality of service as its cost.

"Bundling does seem to impact willingness to change service," Craven said, in an interview. "Quality of service ranks very low in terms of facets for evaluating a service provider. It's more important for Internet than wireless or home phone, but still significantly lower than price or relocation."

The high concern for price may work against the telephone companies that actually recruited DSL customers at a low cost, hoping to "upsell" higher-speed services later, she said.

The biggest downside, however, is that overall customer loyalty is declining, Craven said.

"The factors driving loyalty seem to be a lot lower across the board--service providers are losing some of their loyalty," she said. As a result, In-Stat expects service providers to be constantly promoting their services to attract new customers to replace the ones that are inevitably leaving.

In this way, the consumer business for voice, data and video is likely to begin looking more like the wireless business, where competition has been driving prices down for some time. This is great news for us consumers, but a challenge to service providers, particularly telcos, which have to be investing heavily to build out their networks even as they spend to attract customers and reduce churn.

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