ISP churn ’caused by poor service, not pricing levels’

Bad service rather than competitive pricing is the prime cause for subscriber “churn” for Internet service providers in the UK. And most consumers are happy to stick with existing providers in the face of rival cut-price deals, according to a report by research company Inteco.

The focus group research among recent ISP switchers suggests that personal recommendation and editorial endorsement by specialist magazines remain the main determinants of choice.

Neither pricing levels nor advertising was mentioned as a major factor, according to Adam Daum, principal consultant at Inteco. But free trial offers for ISPs obtained on cover mounts or through direct marketing emerged as a key element in the successful recruitment of subscribers.

“There are those who are always looking around for a bargain and will continually jump ship. But this is quite a small number and it’s not worth deep discounting to keep them on board,” according to Daum.

“The vast majority of people would rather stay with an ISP and will only consider leaving if they are let down by levels of service.”

ISPs which overprice themselves according to the market norm could fail to recruit new subscribers, but service providers may not significantly boost numbers by undercutting rivals, claims Daum.

“People understand that the overall cost of getting online is also significantly affected by the additional cost of making the phone calls,” he says.

“For most people what’s more important than saving a couple of quid a month is having an ISP which provides reliable connections and a good e-mail service.”