Insights and Recommendations — Customer Churn Analysis¶
Executive Summary¶
TelcoMax is experiencing a structural churn problem driven by three interconnected factors: the high proportion of month-to-month contracts (55% of customers), the elevated churn rate among fiber optic customers (42%), and a critical first-12-months retention gap (47% churn among new customers). Immediate intervention focused on contract conversion and new customer onboarding could reduce monthly churn from 26.5% to below 15% within two quarters.
Findings¶
Finding 1 — Contract Type is the Strongest Churn Predictor¶
| Contract | Churn Rate | Customers |
|---|---|---|
| Month-to-month | 42.7% | 3,875 |
| One year | 11.3% | 1,473 |
| Two year | 2.8% | 1,695 |
Interpretation: The difference between month-to-month and two-year contracts is a 15× churn multiplier. The moment a customer commits to a contract, churn risk drops dramatically. This is likely because: (a) there's a financial penalty for leaving, and (b) customers who choose longer contracts self-select as more committed.
Revenue impact: Converting 15% of month-to-month customers (581 customers) to one-year contracts would reduce monthly churn by approximately 247 customers × £66 avg charge = £16,300 MRR saved per month.
Finding 2 — Fiber Optic Has a Quality or Price Problem¶
Fiber optic customers churn at 41.9% — more than double the DSL rate (19.0%). Yet fiber customers pay an average of £91/month (vs £57 for DSL). They are the most valuable customers and the highest-risk.
Possible causes: - Service quality issues (outages, speed problems) - Price sensitivity — fiber is expensive and competition is fierce - Expectations mismatch — marketed as premium, experienced as unreliable
To investigate: cross-reference with support ticket data. Do fiber churners have more unresolved support tickets before leaving?
Finding 3 — The First 6 Months is the Danger Zone¶
Customers with tenure < 6 months churn at 47.4% — nearly one in two leaves within their first 6 months. This "new customer churn" is preventable through onboarding.
Customers who survive to 24+ months churn at only 5.2% — comparable to two-year contract customers.
The insight: long-term customers have high loyalty by definition. The churn problem is almost entirely a new customer problem.
Finding 4 — Electronic Check Customers are High Risk¶
Electronic check (manual payment) users churn at 45.3% — nearly 3× higher than automatic payment methods (15-17%). This may indicate: - These customers are less "sticky" (haven't set up auto-pay = less committed) - Lower tech comfort (older demographic, less digital engagement) - Financial stress (manual bill payment correlates with delayed payment behaviour)
Finding 5 — Add-Ons Reduce Churn¶
Each additional service add-on reduces churn. Customers with 5+ add-ons churn at only 8%, while customers with 0 add-ons churn at 37%.
Mechanism: the more services a customer uses, the higher the switching cost. A customer using phone + broadband + TV + tech support + streaming is much harder to replace than one who only has broadband.
Recommendations¶
Recommendation 1 — Launch a Contract Conversion Campaign¶
Action: Offer month-to-month customers a discounted one-year contract: 3 months at 20% off, then standard rate.
Target: Month-to-month customers with tenure 6-18 months (high churn risk, but enough engagement to suggest they like the service).
Expected impact: 15% conversion rate on 2,000 eligible customers = 300 conversions → £~20,000/month in MRR protected.
Priority: High. No technical change required — marketing and commercial decision only.
Recommendation 2 — Build a 90-Day New Customer Onboarding Programme¶
Action: Implement a structured onboarding journey for new customers: - Day 1: Welcome call + setup assistance - Day 14: Check-in call — is everything working? - Day 30: "First month complete" review — any issues resolved? - Day 60: Add-on recommendation based on usage patterns - Day 90: Contract upgrade discussion
Target: All new customers (tenure 0-3 months)
Expected impact: Reduce first-6-month churn from 47.4% to 30% → retain 190 additional customers per month at £67 average = £12,700 MRR protected.
Recommendation 3 — Investigate and Fix Fiber Optic Experience¶
Action: Pull support ticket data for fiber optic churners. Map the support timeline against churn date. If tickets precede churn, implement: - Proactive outreach when a customer logs a 3rd support ticket - SLA for fiber outage resolution: < 4 hours (vs current < 24 hours) - Fiber satisfaction survey at 30 days
Priority: Medium — needs support ticket data before action.
Recommendation 4 — Incentivise Auto-Pay Enrolment¶
Action: Offer a £5/month discount for setting up automatic payment.
Expected impact: Moving 20% of electronic check users (473 customers) to auto-pay. If auto-pay reduces their churn from 45% to 20%, that's 119 additional retained customers per month.
Cost: 473 customers × £5/month = £2,365/month discount cost vs £119 retained × £65 avg = £7,735 MRR protected. Positive ROI.
At-Risk Customer List¶
The top 100 at-risk current customers (by churn risk score) are available in the operations dashboard. The retention team should prioritise:
- Score 70+ — call within 5 business days
- Score 50-69 — email campaign this week
- Score 30-49 — include in next month's proactive outreach