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Enabling mobile phone upgrades could reduce wireless customer churn

Solutions that improve mobile phone upgrades and speed mobile data transfer to any wireless device can help operators reduce customer churn and ease dependence on specific devices, as well as enable bundle additional applications during device purchases.

One common characteristic of the wireless market has been a high degree of customer churn. Frost & Sullivan/Stratecast market data suggests that for some carriers, customer churn rates can be as high as 3% annually. High churn rates can drive up carrier costs while depressing upsell opportunities and service revenue.

... if a consumer can transfer from one device to any other, the carrier no long is tied to a particular line of devices.

Mike Jude
Program Manager
Frost & Sullivan

This isn't news to wireless operators, and as a result, a fierce competitive dynamic has been driven by the ability to deliver the latest devices for mobile phone upgrades. Carriers understand that a big attraction for wireless consumers is having access to the latest mobile devices – and subscribers are willing to sign extended service contracts to get them. The cost of subsidizing the mobile device is far less than the cost of churn, it turns out.

Simply providing the consumer with a new phone every other year is no longer enough, however. Most consumers practically live on their mobile phones; using them for far more than two-way voice communications. It is not unusual for subscribers to use their cell phones as cameras, day-timers, address and contact lists, and in the case of smart phones, as web browsers, navigation devices and many other functions. My favorite is a free application that turns an Android operating system (OS) phone into a multifunction Star Trek Tricorder.

But mobile phone upgrades every two years can create problems for carriers.

If consumers want to upgrade their phones, either to the latest device made by the same manufacturer, or to one by a different manufacturer, they are unlikely to do so if they know that all of their contact information, pictures, etc. will be lost when they transfer to the new phone. All of a sudden, the utility of being able to upgrade to the latest mobile device that carriers offer subscribers is largely negated. The carrier must provide a transfer mechanism that not only allows a consumer to upgrade within device families but between them.

Speeding and simplifying mobile device data transfer and synchronization

Of course, most carriers have upgrade mechanisms in place. But the experience can be exceptionally painful and time consuming. For mobile phones with large memories, using a cable-based transfer can take up to an hour. And if the type of phone is significantly different, it simply might not be possible.

Technology vendors are beginning to address this problem. One in particular, Synchronoss Technologies, provides an over-the-air, cross-platform solution to transfer and synchronize a subscriber's content and contact information across different mobile devices and networks. This capability further reduces the time needed to transfer the data from one phone to another to a matter of minutes and greatly reduces the time involved for the carrier and offers an improved customer experience.

Mobile transfer and synchronization approaches like this are attractive to operators and to their subscribers. For operators, the immediate value proposition is shortening the time required to upgrade a subscriber. A solution like the one made by Synchronoss makes it easy to bundle additional applications during device purchases and also provides live updates to support new features and new devices.

This also allows operators to be somewhat manufacturer agnostic, because if a consumer can transfer from one device to any other, the carrier no long is tied to a particular line of devices. "This is great news for consumers as well as the carriers," said Synchronoss Chief Marketing Officer Omar Tellez. "Being device and OS agnostic shifts power from the OEM back to the carrier."

The longer term benefits, of course, are customer retention and a reduction of churn. In the current competitive wireless environment, such virtues transcend good business objectives: they can be essential to competitive survival.

About the author: Mike Jude is a program manager at Stratecast/Frost & Sullivan in charge of the consumer communication services practice. He brings 30 years of experience in technology management in manufacturing, wide-area network design, intellectual property management and public policy. Jude holds degrees in electrical engineering and engineering management and a Ph.D. in decision analysis. He is co-author of The Case for Virtual Business Processes: Reduce Costs, Improve Efficiencies and Focus on Your Core Business, Cisco Press, 2003.


This was last published in October 2010

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