Need For Speed Drives Customer Churn

The need for speed is driving business Internet subscribers to change providers.

The need for speed is driving business Internet subscribers to change providers.

About 24 percent of respondents say they switched ISPs in the past year, compared with 23 percent in 2000 and 20 percent the year before. About 28 percent say they are extremely or somewhat likely to switch in the next year.Click For Chart

Among those that have already switched, speed - or the lack thereof - was the primary reason: 34 percent said they moved to get broadband access. The second most common motivator - limited bandwidth - was cited 33 percent of the time.

Availability and quality of technical support is the third most common reason for switching ISPs, cited by 32 percent of those that changed providers in the past year. Other common reasons for switching are price and slow connections/busy signals, given by 30 percent of switchers, and too much down time, mentioned by 22 percent. Slow Web page downloads motivated 19 percent of recent switchers, followed by slow e-mail delivery and billing problems, mentioned by 15 percent.

Connection Woes

When asked to identify the most common problems they encounter with their ISP, connectivity problems top the list. Forty-seven percent of the customers surveyed are plagued by connectivity problems and 46 percent cite frequent unexpected disconnections from the Internet. Forty percent complain of slow connection speeds, 31 percent of poor phone responsiveness, 30 percent of inadequate technical support, 27 percent of e-mail outages, 26 percent of poor diagnosis and repair of problems, and 26 percent of slow Web page downloads.

Once the bandwidth hunger is sated, ISP customers are content to stay put. About 69 percent of Road Runner customers say theyre not tempted to move on. This compares with 52 percent for the surveyed population as a whole. Southwestern Bell Internet Services customers are also likely to stay in the fold, with 58 percent saying they are extremely or somewhat unlikely to switch ISPs. AT&T Broadband and @Home customers are also loyal, with 57 percent unlikely to switch.

For those that have watched PSINets star fade, 60 percent of that providers customers describe themselves as likely to switch during the coming year. Since PSINet appears to have one foot in the grave, this behavior is quite predictable.

Next most likely to switch are AOL customers, 44 percent of which describe themselves as extremely or somewhat likely to switch ISPs in the coming year. AOL customers experience the highest rate of reliability problems; about 86 percent say they are frequently cut off unexpectedly. Also, 62 percent of AOL respondents complain of slow connection speeds, 52 percent cite slow Web page downloads and 43 percent suffer with poor spam filtering.

Still, AOL customers show remarkable staying power. At 29 months, AOL has the longest mean retention time of any of the service providers rated. Sixty-five percent of the AOL customers surveyed have used AOL longer than three years.

Meanwhile, about 41 percent of XO Communications customers say they are extremely or somewhat likely to switch during the next 12 months. Thoughts of switching may be fueled by customers displeasure with technical support, since 51 percent of XO Communications customers surveyed indicate that the level of technical support they receive is inadequate - higher than for any other ISP.

Network connectivity problems at a number of ISPs are likely to increase the rate at which customers bail during the coming year. Fifty-seven percent of Pacific Bell Internet customers surveyed, 54 percent of Verizon Communications customers, 53 percent of Verio customers and 52 percent of The Microsoft Network customers describe being cut off from the Internet as a frequent problem.

@Home customers suffer from an unusual rate of e-mail connection problems, with 63 percent describing e-mail outages as frequent.

In addition to an inordinate number of connectivity problems, Pacific Bell Internet customers surveyed cite a higher incidence of other problems compared with other ISPs. Fifty-one percent describe poor phone responsiveness as a frequent problem, and 42 percent complain of frequent problems with poor diagnosis and repair. Yet when it comes to plans for switching, these problems dont increase the proclivity of Pacific Bell Internet customers to switch above the mean for the entire population. The mean intent to switch for all customers surveyed was 2.58 on a 5-point scale, exactly matching the mean for Pacific Bell Internets customers.

For all of UUnets high ratings, it is not immune to problems. Twenty-two percent of its customers surveyed - more than those of any other service provider - say account management is poor.

Fat pipes translate to customer loyalty: Dial-up and 56-kilobit-per-second frame relay customers surveyed describe themselves as most likely to switch, and OC-3 (155-megabit-per-second) customers are least likely to switch. Thirty-eight percent of dial-up customers say they are somewhat or extremely likely to exchange ISPs in the next year, compared with 14 percent of OC-3 customers. Twenty-one percent of DS-3/T3 (45-Mbps) and cable modem customers are likely to switch, compared with 25 percent of T1 (1.5-Mbps) customers and fixed wireless customers, and 26 percent of xDSL customers.