Over the past 15 years, the number of U.S. wireless subscribers has grown from less than 100,000 people to more than 90 million. And, Cahners In-Stat Group, a high-tech market research firm, predicts that wireless penetration will more than double over the next five years. However, annual wireless churn rates have increased 4 percent in the last year and will continue to rise if wireless providers don't focus on customer retention issues.

Ken Hyers, industry analyst for In-Stat's Wireless Strategies Service, states that "it is debatable whether carriers are sufficiently aware of the problem that churn presents, as it is not high on the priority list of upper level management. For most, the priority is to maintain high customer acquisition rates, often at the expense of customer retention, even when the cost to keep a current customer is a fraction of that to acquire a new one."

Companies who are aware of churn and are willing to combat its effects have several choices. There are a myriad of companies that offer customer retention solutions, however, carriers must ensure that they select the right solution for their specific needs. In-Stat predicts that, in the future, overall ARPU (Average Revenue Per User) is going to hold steady at near-current levels and that the price per minute will continue to fall. Bucket plans and additional service sales will be needed to make up the revenue disparity and retention of valuable customers, those that use more minutes and services, will be necessary.

Other findings from the recent In-Stat report include:

• Cellular and PCS carriers will add 20 million new subscribers in 2000. During the same period, 31 million subscribers will churn off of their current carrier's network. For the second year in a row, the U.S. churn rate will exceed the new subscriber add rate by 150%.
• Because of high customer acquisition costs, as well as continuing support and service costs, current average billing rates typically don't let carriers make a profit from customers during the first year.
• Taking a proactive approach is one of the most effective ways to combat churn. Marketing campaigns aimed at reaching customers before they switch to another carrier can minimize customer attrition.