1) Churn rates, defined as the rate of loss of customers over time, are rising across many industries as customers are becoming more willing to switch providers in search of better prices and benefits. 2) The author provides examples of how they personally churned providers for health insurance, car insurance, and mobile phone plans, saving significant money each time by switching. 3) Factors driving higher churn include increased availability of information to compare options, lower barriers to switching providers, and companies using customers' rising power to their advantage through improved offers to retain business.

1. ChurnRates-If youare not payingattentiontothemyoushouldbe
Or Confessionsof aChurner
By Eric Hooper,Partner,BlackHouse
Churn,definedas the rate of lossof customersovera measurable time periodisrising.
I knowthisbecause inthe lastsix monthsI have churnedoutfrom my Health(like the Romans,what
have theyeverdone forme?),Carinsurance andmobile phone providers,the previousrelationships
being30, 20 and 3 yearsrespectively.Eachwasa differentexperience,buteachhadan outcome of a
significantlylowerprice andimprovedbenefitsthanwasachievedbefore.
In one case I useda thirdpartybroker, anothersimplythe outcome of some on-line researchandin
the case of the mobile phone providerIwascold calledoff anexpiredcustomerlist.Mosttelling,I
have nowchurnedback to my original phone provider.Three yearsagotheywouldnoteven
contemplate analternativeplan,soIleftfora 40% saving.Now theyare providinga20% discount
and bettercoverage.The availabilityof evenmore informationtoassistindecisionmakingand
lowerbarrierstoswitching,meansthatthe powerof customersisrisingandthisisimpactingon
business/customerrelationshipandBusinessmodels.
However,Imustalsoconfessthat I was not alwaysthisruthlessorsavvy,Iwas initiallyanaccidental
churner.For more than 25 yearsI have beena memberof anAirline FrequentFlierProgramme and
once exclusivelyflew withthatCarrier.However,one dayfrustratedbythe inabilityto navigate the
Airlineswebsite andaccessflightandprice informationandfollowingapreviouspoorbooking
experience, withsome trepidationIaccessedanon-line travel site.Ihave notlookedbacksince and
while Istill sometimesflywiththe oldcarrier,whenasked,InolongersayI flyQantasbut with
Expedia.
While the evidence isthere in HealthandCar Insurance, Banking,Telecommunications,Travel anda
hostof otherindustrysectors, itisjustnot limitedto Organisations withsignificantdigitalbusiness
platforms,butnon-digital aswell.
For example,Inthe MiningSectorthere isarelentlesspushforcostreductionsthroughthe supply
chain,and we have seentwentyyearbusinessrelationshipsdisappearattender forthe sake of a few
percentage points.Atone company,where the average transactionsize is$150, insteadof applying
a rollingratesschedule,customersare now seekinguptothree quotesoneverytransaction.While
thisapproach ispartlyborne out of economicnecessity,technologyandthe use of betterdata
handlingtechniques,have nowmade such approaches, costeffective.
So whatdo churn ratestell us?In my35 yearsof experience asthe overseerof balance sheets,the
Churnrate measure isthe equivalentof the Canaryinthe cage, itis an earlywarningindicator.
Churncan be a relative comparedagainstyourowndataor an industrybenchmark, butthe number
by itself ismeaninglesswithoutadiagnosticreview of whythe numberiswhatitisand where the
numberistrending.
The absolute numberandtrendcouldbe pointingtoissuessuchas,the customerinteraction
experience, the quality of the productorservice, changesincompetitive behaviourorona larger
scale a fundamental shiftinindustrystructuresandbusinessmodels.

2. However,churn,like Egodoesnothave to be a dirty word (myage definitelyshowingnow),AtBlack
House we have clients, thatare on the positive side of the churnledger,infacttheirbusinessisbuilt
on it. In areas suchas telecommunicationsandfinancial servicesthese clientsacquire acustomer
bookat a muchlowercost thanthe cost peracquisitionthrough non-organicmeans,simplybecause
theycan holdon to theircustomerslongerandupsell products/services. Asaresulttheyendupwith
greaterlife-time customervalue, higherreferral rates andlowercustomeracquisitioncosts.
Theyall have differingstrategiesandcustomervaluepropositions,buttrackingandunderstanding
the reasonsfor churnboth positive andnegative isfundamentaltotheirsuccess.
Eric Hooper isa Partnerat BlackHouse a boutique consultancyspecialisingintailoredsupportfor
successful businessesinassessing,developing,measuringandexecutingstrategy.