Churn baby churn. A prepaid inferno?

For many mobile credit providers, the high churn in the prepaid industry is a cause for concern. Luckily, there are ways to combat churn and increase loyalty that don’t require giving it all away for free.

There’s blood in the water

In their 2005 business classic, Blue Ocean Strategy, authors W. Chan Kim and Renée Mauborgne explained the difference between a blue ocean and a red ocean. Whereas a blue ocean is a clear and unexplored space with hardly any players and vast growth opportunities, a red ocean is marred by cut-throat competition. Using this analogy, the prepaid market is definitely a red ocean.

In the European telecom landscape, the dynamics of subscriber acquisition cost (SAC) and churn rates are heavily influenced by competitive pressures and consumer behaviour, with particular emphasis on the distinction between traditional and low-cost operators. In markets like Germany, Italy, and Spain, there’s a noticeable trend where a significant portion of subscribers are shifting towards low-cost operators, largely driven by price sensitivity. This movement is intensifying the churn rates among traditional operators, prompting them to rethink their customer retention strategies to maintain profitability​

Top-up is risky business

Whenever a customer runs out of credit, they need to decide whether or not to remain a prepaid customer and if so, with which provider. Whether it’s more data, or lower prices, prepaid providers are waging war like never before and many users are tempted to choose the flavour of the month. Unsurprisingly for telcos, the most dangerous phase in the customer life-cycle is credit top-up. Whenever a customer wades into this red ocean, odds are they might be gobbled up by a competitor.

The fact of the matter is that when it comes to prepaid credit providers, prepaid users have a wide range of options to choose from, and competing on price can easily become a race to the bottom. So instead of lowering prices and investing in promotional deals like everybody else, wouldn’t it be smarter to simply improve the top-up process? Improving the top-up process means your customers get to keep their feet dry and stick with the provider they know.

Solutions to churn in the prepaid market

What’s one major thing that customers value more than saving money? Convenience! So, what if you could spend your time maintaining and growing a subscriber base rather than simply replacing lost customers?

Automatic top-up

One proven way to differentiate your business from the competition and reduce churn is by offering automatic top-up. Automatic top-up works in various ways. It can either be triggered by a recurring date or whenever credit drops below a predetermined threshold.

Learn more about this topic:
Automatic top-up – Future-proof or passing fad?

Chatbot top-up

Another solution is topping up via chatbots within popular apps such as WhatsApp. Here, users simply follow a structured chat conversation, selecting their preferred options, and the credit is added to their balance instantaneously.

Top-up should be effortless

At Alphacomm, we believe topping up mobile phone credit should be effortless for your customers. Keeping customers on board requires thinking beyond the realm of promotional activities and special deals. To that end, we’ve developed proven solutions to help you do just that. Meet Checkmaxx, a complete SaaS solution for selling high-risk digital goods. Get in touch with our revenue geeks to find out if Checkmaxx is right for your business.