Wednesday, 28 March, 2007

1/3 of subscribers leave… boo hoo

One hears this horrifying statistic often enough: A third of mobile companies’ subscribers leave by the end of the year. So they have to grow at 33% just to stay in place. Err… is it really such a bad thing?

The back-of-envelope-calculation goes like this: 33% lost a year is about 3% leaving every month, i.e., one out of every 33 customers you had at the beginning of the month will leave you by the end of the month. Not bad at all.

(The calculation assumes a constant rate of leaving, which is absurd. Which is much the real problem. Nobody discusses the details, only big figures, which mean nothing.)

Let’s bring in the decreasing base into the ‘calculation’, just for the heck of it (this phrase has been around quite some time now, so we suppose it’s ok to use it). Say, you start with a 100 customers on 1 January, 3 of who leave every month. That means you’d start (the worst month) December with 67 subscribers and end it with 64: a 4.5% loss. 1 in 22.

Is that very dreadful?

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