side. The simple fact of the matter is that, unless you have a larger source of funding than your competitors, they can force you into a position where you need to let some of your customers go. When Conditions Are Right, You Will Loose Money By looking at issues of churn from the economic perspective, it is easy to see how it happens and why you cannot prevent it from occurring. This perspective also gives us insight into our next observation about churn, namely, that when churn conditions are right, you will loose money no matter what you do. This is the point that brings the entire churn issue into perspective. After all, if churn was preventable, or if churn conditions could be experienced without the loss of revenue, then churn would not be perceived as that big of a problem. Unfortunately, no matter what you do, when churn conditions are right then competitors will try to take your customers either reducing prices, increasing service, or creating advertising campaigns that attract them. And revenues will suffer. When this happens, you have only three options. 1) Ignore the Predatory Activity This is the default position that most companies take when churn first begins to be a problem. Since you don't anticipate it or understand it, the tendency is to ignore it and hope that it stops soon. Chapter 7 Companies that take this approach quickly find out just how expensive churn can be. In this case, the financial loss is revenue lost from customers that are no longer on board. 2) Launch Counter-Measures When churn conditions exist, a company can launch counter measures to try to head off the churn. Such counter measures can take several forms: price discounts (to offset the reductions offered by competitors), handset subsidies (to replace old equipment), and loyalty programs of many different styles. In this case, the cost of churn comes from the retention campaign activities and from the loss of revenue due to price reductions. These outlays are likely to be less than the revenue lost by ignoring the churn situ