Quick Quiz: Who has better retention rates, associations or wireless phone companies?
I got thinking about this the other day when I read a piece in the Washington Post on AT&T. They were highlighting that wireless “customer turnover narrowed to 1.7 percent to from 1.8 percent a year ago.” Sounds pretty good, except that they report turnover for each month. So that 1.7% monthly churn rate turns into an annual loss of 20.4% or a 79.6 percent retention rate. From my limited searching around, these rates are close to other wireless providers.
On the association side, ASAE and the Center report that the median renewal rate for individual membership associations is 87% and 94% for trade associations. [1] So associations win the churn battle. Good job!
What did you guess? What went into your thinking?
Having associations come out on top was a pleasant surprise for me. You would think that AT&T has some clear advantages to associations that might help them retain customers at a better rate. They have long term contracts with big cancellation fees, a monthly billing routine, and an opt-out instead an opt-in renewal system. Plus, they have the hot new iPhone.
If you are interested in looking at this comparison more deeply, take a look at the MSN article on a Virginia wireless company, NTELOS. At the end of the article it shows their SEC 10-K report on their wireless subscriber acquisition and renewal. It is remarkably similar to the dashboard report that I recommend to associations to keep track of membership growth and renewals. You can see the post for this on this July 9th.
I got thinking about this the other day when I read a piece in the Washington Post on AT&T. They were highlighting that wireless “customer turnover narrowed to 1.7 percent to from 1.8 percent a year ago.” Sounds pretty good, except that they report turnover for each month. So that 1.7% monthly churn rate turns into an annual loss of 20.4% or a 79.6 percent retention rate. From my limited searching around, these rates are close to other wireless providers.
On the association side, ASAE and the Center report that the median renewal rate for individual membership associations is 87% and 94% for trade associations. [1] So associations win the churn battle. Good job!
What did you guess? What went into your thinking?
Having associations come out on top was a pleasant surprise for me. You would think that AT&T has some clear advantages to associations that might help them retain customers at a better rate. They have long term contracts with big cancellation fees, a monthly billing routine, and an opt-out instead an opt-in renewal system. Plus, they have the hot new iPhone.
If you are interested in looking at this comparison more deeply, take a look at the MSN article on a Virginia wireless company, NTELOS. At the end of the article it shows their SEC 10-K report on their wireless subscriber acquisition and renewal. It is remarkably similar to the dashboard report that I recommend to associations to keep track of membership growth and renewals. You can see the post for this on this July 9th.
[1] 2006 American Society of Association Executives (ASAE, Policies and Procedures in Association Management: A Benchmarking Guide, vol. 1 Membership P. 36.
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5 comments:
Interesting comparison.
Although most consumers have a few more options available for cellular service than they would for association membership.
David -- Good point. With portable numbers,customers can easily move between providers and shop for the best price. This would lead to lower retention. Tony
In addition, I would *hope* that associations are actually building bonds that are stronger than those one has with a "service provider" like AT&T. I've been a Verizon customer for a couple of years now, but if I had to switch tomorrow for some reason, I would in a heartbeat. I feel no loyalty.
I'd hope the average association member would feel differently.
Wes -- Thanks for the comment. I agree with your "hope". But sadly there are associations that do not move beyond the transactional relationship with members. I am doing a post today on the topic of building "member interdependence" with an association. This is the part of the membership life cycle that moves members beyond the purely transactional level of membership to the relational. Let me know what you think. Tony
Hey Clark thanks for the positive feedback. I am glad that you find the blog of help. Feel free to jump in on the discussion. Tony
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