ght, You Cannot Prevent Churn Given that there are SO many different conditions that might create a churn situation, it is important that you do something to manage the situation. However, many people have a persistent, naive preconception about churn that must be addressed before any serious churn management can begin. They mistakenly believe that, if the company acts in the right way, churn can be prevented. That is simply impossible. When competitors enter the market, their aim is to either secure customers before you get them, or to take away the customers you already have. These competitors have a limited number of tools they can use. The options for action are limited, assuming that all carriers in the market have the same basic advantages in the areas of regulation, network building expense, and other administrative criteria. They can Reduce prices Invest heavily in advertising Invest in promotion and handset subsidy No matter how happy customers are with your service, if a competitor continues to advertise better and better prices, it is only a matter of time before they change over. $11.00 Network Operations and Depreciation $3.00 Billing and Customer Care $15.50 Acquisition and Retention $3.00 Administration $33 per month Figure 7-4: Distribution of monthly revenues (U.S.) eXcellence in Telecommunications The Telco Churn Handbook Figure 7-4 shows how the average monthly revenue for a U.S. wireless carrier is distributed for different costs. The average customer bill of $33 per month is allocated to network expenses, administration, billing, and marketing/customer retention. If we assume that the administration, billing, and network costs are similar for all carriers (and cannot be reduced) then the only place where competitors can "play with the numbers" is in the marketing/ customer retention budget area. The reason you cannot prevent churn, therefore, is because you cannot prevent your competitors from reducing prices and advertising heavily enough to entice a certain number of your customers to their