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..