To learn more about rotational churn and how Idiro can help you tackle it, check out this slide deck or read all about it below.
What is Rotational Churn?
Rotational churn is the phenomenon whereby a mobile phone customer buys a new mobile phone from their current mobile operator. Rather than keeping their old SIM and phone number, they choose to take an offer aimed at new customers. To the mobile operator it appears that the old customer has churned and a new customer joined – whereas in fact, neither has occurred.
Some commentators use the terms ‘spinning’ or ‘churn-and-return’ to describe rotational churn. Rotational churn is estimated to make up between 30% and 50% of churn in many operators, and is more prevalent in markets where handsets are subsidised by the mobile operators.
Who are the Rotational Churners?
In most markets, rotational churners are overwhelmingly prepaid. In Idiro’s experience, rotational churners tend to fall into one of the following groups:
- Users whose social circle is physically close to to them – for example college students or schoolchildren.
- Customers with a very small number of incoming links (i.e. those who are called by a small number of people).
- Those wishing to leave their previous mobile phone identity behind, perhaps because of a relationship breakup.
These people have in common is that they do not value their phone number highly – i.e. they have low equity in the number. However, customers are showing loyalty to the network.
One might contrast these ‘spinners’ with self-employed plumbers, who rely on their mobile numbers for repeat business. If they have no loyalty to the network they will churn but they will always retain their number.
What Drives Rotational Churn?
Typically, high rotational churn is indicative of a mismatch between the telco’s acquisition and retention strategies. Customers perceive that the company’s offers (handsets or free credit) to new subscribers are better than any retention / upgrade offers, so those customers with low equity in their phone number, as described above, choose the new customer offer.
A certain level of rotational churn is unavoidable, of course. However, it is in the interest of the mobile operator to minimise it
The Costs of Rotational Churn
Some of the downsides of rotational churn are:
- Rotational churn means acquisition rates are overstated and the cost per new customer acquired (net of rotational churn) is understated. This can create a vicious circle of increases in acquisition spend to compensate for increasing churn.
- Rotational churn causes the churn rate to be overstated, giving an over-negative picture to investors.
- A habitual rotational churner presents a greater risk of actually churning at the next upgrade than a habitual upgrader does.
- Valuable customer history, segmentation and registration data for rotational churners is lost.
Understanding Rotational Churn with Idiro Fingerprinting
Idiro Fingerprinting is a sophisticated tool that uses Social Network Analysis techniques to identify rotational churners. It analyses operator call records to determine the structure of calling communities. These communities tend to be relatively stable over a period of a few weeks, so when a person leaves the community, it leaves a ‘structural hole’ in the community. The calling patterns and community status of an individual make up a “digital fingerprint” which can rapidly identify them as a rotational churner.
Using Idiro Fingerprinting, mobile operators can identify rotational churners. Once these are identified, Idiro’s consultants work with the telcos to develop and implement strategies to minimise the level of rotational churn.
Tackling Rotational Churn
With Idiro’s help, mobile operators can reduce rotational churn to acceptable levels.
To learn more about the benefits that Idiro Fingerprinting can bring to your company, contact Idiro at email@example.com.