the best time? Imagine a situation where you, a telco provider, see a competitor offering prices 10% lower than your own. You might decide that an effective churn management strategy would be to lower all customers' prices by a matching 10%. What will the result of this action be? First, revenue will immediately be reduced by 10%. Obviously, since you dropped your rates. Second, some customers will leave anyway. They will leave because price wasn't their real reason to churn and the promotion simply offered a convenient opportunity. Third, you will have taught your customers that they should expect a price reduction whenever the competition offers one. In fact, you have also taught the customer that if you don't match the price reduction, then you are probably cheating them. Fourth, although reducing prices immediately by 10% probably saved a few customers from leaving, in the majority of cases you have simply reduced the price for many already satisfied customers, customers who would have kept on paying the higher price if you hadn't initiated the reduction in the first place. Ultimately, then, the problem with acting on churn issues too soon is that it costs you money and creates mixed messages for the customer. eXcellence in Telecommunications The Telco Churn Handbook The Consequences Of Acting Too Late The other side of the equation is when we react too slowly. Using the same situation as before, but this time you decide instead to do nothing. What are the consequences? First, some customers will see the competitor's price reduction and churn. An equivalent amount of revenue will be lost. Second, a large number of customers will stay, but will begin to question their decision to remain with your firm. Their likelihood to churn will increase. These customers will be much more susceptible to the next price reduction they see. Finally, the company will try to reacquire the lost customers, or replace them with new ones by eventually offering the price reduction. The customers that come back have learned that a go