germanicus??, page-12

re: lets move on from germanicant Hi Merlin99,

If I may, I would like to clarify one of your observations - to do with the churn rate.

In your post you stated the following;
"And 350/month is 1.4% - 1.75% of the customer base. Pretty normal if you look around".

The 1.4% figure appears based on a 25,000 sub level, and for comparative purposes, the 1.75% figure appears based on the 20,000 sub level (which has since grown by 5,000 to 25,000, etc).

Both of the churn rates you have mentioned are monthly rates. Annualised, the 1.4% monthly churn comes to 16.8% (or 1/6 of the total sub base, @25,000). Also, annualised, the 1.75% churn comes to 21% (or 1/5 of the total sub base, @20,000).

My questions to you, therefore, are this:
1)
Are monthly churn rates in the 1.4-1.75% range which, when annualised, can approximate the 15-20% range, considered normal?
2)
If so, will this likely change as the business gains traction (maturity, etc)?
3)
If a churn rate of this magnitude is evident (coupled together with a rejection rate that also seems high on a comparative basis), does this suggest that one of the biggest challenges facing a business in the broadband (etc) space is actually its customer acquisition and customer maintenance costs?
4)
If so, is this one of the main variable areas which could beneficially benefit a company (if they can get their churn /rejection factors down), or converely, adversely impact a company (if they cannot do so)?

We often talk of the infrastructure investment costs involved in such businesses, and in the time taken to beuild scale in the marketplace, but what is often forgotten are the costs involved in acquiring and then keeping customers. Such businesses really are "people" intensive due to this factor.

I would, therefore, be interested in your observations on this as I think that this is one of the areas that continues to challenge the industry broadly, as opposed to PEO specifically.