17-Jun-2011 09:46

Have you lost 500 million clients recently?

Retention of a strong, loyal & satisfied client base can make or break a business.

Skype, the telecoms company, has until recently failed to disclose any details on their churn levels, i.e. the numbers of clients who leave or no longer use their system..

Skype do commonly present their statistic that they have nearly 700 million user accounts and approximately 170 million active users.

This begs the question: so where have these dormant 500+ million accounts gone?

All new Skype customers climb a ladder of engagement to set up & use the service & can fall off the ladder at any rung: preview, download, installation, first call, following calls, first video call, convincing someone else to join Skype too, buying Skype credits, first conference call, buying a Skype voice subscription, buying an add-on or premium Skype product etc…

Using Skype’s own statistics and charts, surprising facts appear…:

• Many who use SkypeOut for the first time, stay loyal for the next year. However, second year spending levels reductions vary between 9% and 20%. It’s been about 20% for the last couple of years.

• Later abandonment is offset by growth in SkypeOut revenue per user. Sometimes it is more than offset by spending growth.

Skype refers to this as loyalty and they are indeed correct.
As with many products and services a degree of lethargy kicks in; ‘The devil you know’ and so forth…

Once a Skype customer, chances are 80% that not only will you remain a user but that you will spend more on Skype services over time.

However, in the years following joining the Skype network it gets a little more interesting..

The second year drop is followed by an increase for two years and slight fall off in year five.

Winning back those who tried Skype and left could change Skype’s messaging and design choices over the next few years.

Skype operates a defensive strategy, but as all of us in business understand, retaining and winning back former customers is far, far cheaper (and simpler) than trying to catch new clients..

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Contributed by Graham on 20-Jun-2011 20:45
Why use Skype? Conference calls, video calls, market leader therefore most other people on it and contactable for free, ability to send files during the call in the chat window, ease of use and a long etcetera including integration with Mobivox which I use for foreign calls from my mobile.
Viber,for example, I find is excellent for calls and the sound quality superb... when it works. But if I had to trust a call then skype every time.
Contributed by Norman Feiner on 19-Jun-2011 23:22
Nice comments and food for thought....
Contributed by Steve Hall on 19-Jun-2011 12:07
Another thought: if you REALLY want to upset me before we have even spoken/done business just say, "I'll give you a Skype call"

What does that say about you? That you value the conversation so little that you are prepared to risk it to the whims of Skype.
Much better to say IMHO, "I will call you to discuss". If you don't think I am not worth one penny per minute, please don't bother making the call.
Contributed by Steve Hall on 19-Jun-2011 12:03
What I like about Norway is that when a monopoly/ex monopoly/large private company fails to deliver the government really give them grief. This week Telenor has had huge problems and the communications minister has waded in to tell them that their level of service is unacceptable. I cannot see that ever happening in UK or Spain. (In fact "unacceptable" would be an improvement in Spain!) I just do not understand why people put up with the prices of BT/Telefónica or the quality of Skype when there are so many options nowadays.
Contributed by Norman Feiner on 19-Jun-2011 01:21
Thanks for the plug Steve (& I agree with your comment)

As an example we have an unlimited UK (landline) & International call plan for just £14.80 +vat per month i.e. £177.60 +vat per annum which competes favourably with Steve's 200Euro plan... Also, we route all calls via Tier-1 carriers like BT, so quality is rarely an issue.

Contributed by Steve Hall on 19-Jun-2011 01:13
I struggle to understand why people use Skype. I am sure that I am registered as one of their 700 million but the service/price balance is so poor nowadays I cannot remember the last time I used it. I arrived in Norway last night to see a 30 meter hoarding offering me UNLIMITED calls in Europe (+USA, China etc) for 200 euros per ANNUM! It has clearly lost it's financial attraction and I have never been convinced that its quality is good enough for professional use. Most of the generic suppliers (eg Simply-Fone in the UK would be better bets for me.
Contributed by Nick Braak on 19-Jun-2011 00:25

Nice analysis.

Thanks Norman.
Contributed by Graeme Spice on 17-Jun-2011 09:58
Was thinking about the years loyalty - it's because a lot of the subscription models are prepaid for a year!

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