Offers to new customers could drive broadband churn
The broadband market is massively competitive. This is a good thing. As in many markets ISPs offer incentives for new customers to sign up. In the B2B world these incentives are frequently given to resellers rather than the end customer. However in the consumer marketplace where everything is automated and done online new customers often get a bung to join.
These highly visible offers often rub up existing customers the wrong way. They feel unloved, regardless of whether they received such an offer themselves way back when. It is also very noticeable that customers will complain about the slightest additional cost and when they have a service interruption look for compensation. I some cases, where their monthly broadband bill is already miniscule, for example TalkTalk’s standard monthly cost for their LLU ADSL product is £3.50 plus line rental, any compensation received is likely to be very token indeed.
@SkyHelpTeam to upgrade to tv package would be £42 a month I can get virgin or talktalk for less new custs get better offers than existing
— Shaun Hamilton (@Shaunhamilton87) January 18, 2015
So when a customer, such as Shaun Hamilton in our example tweet above wants to upgrade his existing service but finds that he can’t get a particularly good deal because such deals are only available to new subscribers it is easy to see how he may be tempted to up sticks and leave.
Regardless of the fact that all ISPs sting leaving customers with an admin fee , typically around £30, it is possible to make big savings in the first year of a new service. As well as attractive (free even) monthly rates in the first year up front incentives can often be over £100 in terms of cashback or a shopping voucher.
If you are going for a high end TV package the savings can occasionally exceed £300 in the first year, if you catch the offer at the right time.
One wonders what effect this has on churn. Apart from the occasional sporting package most of the ISPs offer similar TV packages, at least those that do TV, so it’s not as if the big consumer players have that much in the way of exclusive content. Sport seems to be the one exception here and although Sky Sports is available via most ISPs BT have been building up some exclusivity with their rugby coverage.
It’s a difficult equation to manage. All ISPs assume a certain level of customer churn. One wonders whether churn generated by over-gilding the lilly for new customers might get out of hand. At least they can control this as they can just reduce their attractiveness to newbies.
It’s a difficult marketplace. You can check out the latest deals over at BROADBANDRating.
