 a great degree of latitude in how this kind of churn is managed. You also have a great deal of control over the amount of involuntary churn risk exposure that you take. Fraud, credit, and underutilization are all problems that can be anticipated ahead of time. By tightening up your customer screening efforts you can prevent many of these situations. On the other hand, you can loosen up the criteria, allowing more customers into the firm, thereby increasing your potential revenues but also increasing your risk of having to deal with these kinds of churn more often. Ultimately, it is simply a tradeoff decision based on a number of factors. Some companies need to have a high headcount (for reasons of investor confidence or marketplace image). In these cases, allowing the obviously higher risk customers to sign up can be one of the best ways to address the issue. The downside, of course, is that you will have to deal with these people at a later time. Chapter 4 SECTION 4 CHURN TAXONOMY - PART 2: VOLUNTARY CHURN When we try to understand exactly why our customers are churning, we begin to see how little we know about who our customers are, why they subscribe to our service, and what prompts them to change carriers. While customers may be very clear about their reasons for churning (the number one reason being price), the decision to actually change carriers is a complex one with many contributing factors. Learning why your customers churn teaches you why they were attracted to you in the first place. And as telecommunications becomes more complex, it provides you with the information you need to anticipate what their next set of needs will be. VOLUNTARY CHURN Although the involuntary churn categories define a large part of the customer attrition problems, when people think about telco churn it is usually the voluntary kind that comes to mind. Voluntary churn occurs when the customer initiates termination of the service contract. eXcellence in Telecommunications The Telco Churn Handbook Figure 4-1: Voluntary Churn Mar