Part
01
of one
Part
01
Please give me insight into TracFones retention issues.
Hello, and thanks for your question asking for an insight in TracFone's retention issues. I have found that TracFone have a high churn rate (4.3%) in comparison to the industry average (1%) and in comparison to their competitors. I also found that they are losing their customers possibly in part because of bad press surrounding a recent lawsuit, but also because their customers are shopping around for better deals, and their voice-only plans are becoming unpopular. Below you will find a deep dive into my research, along with all the details as to how I came to this conclusion.
OVERVIEW
In order to answer your question I searched through official statements regarding the company's churn rates. I also looked for information on their revenues, as well as evidence to suggest why they are losing customers. Finally, I found the most recent figure relating to the average churn rate for the entire MVNO industry.
The sources that I found most useful for answering your question were articles by Prepaid Phone News and Strand Reports.
CHURN RATES & REVENUE LOSS
Statista has data to show how TracFone have steadily lost their customers, from 9.91 million in the autumn of 2010 to 9.33 million in Spring of 2016.
In comparison to their competitors they are failing to pick up new customers, for example they only secured 101,000 new subscribers in the fourth quarter of 2014. Over the year of 2016 they lost 458,000 subscribers, and suffered a 24% decline in revenue.
In 2013 they reported a churn rate of 4.2%, in 2015 this was 4.5% and in 2016 this recovered slightly to 4.3%. However this is still much higher than their competitors in the MVNO space. For example, Verizon Wireless's average monthly churn rate for the first quarter of 2017 was at 1.31%. Between 2012 to 2017 we can see that competitors mostly stayed below a churn rate of 3%. TracFone's churn rates are also far higher than the industry average of 1% per month.
REASONS FOR CUSTOMER LOSSES
TracFone are losing customers because their current customer base is not loyal. I found some research, that although quite old now, provides some useful insights on this. For example, the study found that "TracFone customers are more than three times more likely to visit Virgin Mobile’s Web site than the average American Internet user." They also found that "TracFone users also are more than three times as likely to visit the boostmobile.com site and more than 2.5 times as likely to visit the shopalltel.com site as the typical Web surfer"- showing that TracFone customers are often comparing similar companies. It could be that TracFone are losing customers to their major competitors in this way. More recent evidence shows that TracFone has continued to loose customers, whereas their competitors have continued to grow.
In addition to this, I found that TracFone are suffering losses mostly from their voice-only plans. Showing that this is their weak product that is losing them customers. Another source backed this up.
Finally, TracFone has suffered some bad press recently which is bound to have impacted on their brand image. There was a lawsuit involving both Walmart and TracFone because they falsely advertised that the TracFone plans they were selling had unlimited data. The company lost the lawsuit and were forced to pay $40 million in refunds.
CONCLUSION
Overall I have found that TracFone have a high churn rate in comparison to the industry average and in comparison to their competitors. They are losing their customers possibly in part because of bad press surrounding a recent lawsuit, but also because their customers are shopping around for better deals, and their voice-only plans are becoming unpopular.
Thanks for using Wonder, please let us know if there's anything else that we can help out with!