Need to connect with a solution provider?
                     CONTACT US

Hosted PBX Churn: 'Infinitesimal' Among Enterprises

Staff Writer's picture

This article was originally published on NoJitter

Eastern Management Group finds churn acceptable at all customer levels, but sees room to make a good thing better for SMBs.

As hosted PBX accounts for an increasing share of the PBX market -- 18% of all sales in 2017 -- let's see just how sticky the service is. (Spoiler alert: So far there's not a lot of hosted UC churn.)

Eastern Management Group research analysts recently completed a four-year study of the hosted market and published the research in a new report, "Worldwide Hosted PBX Market 2017-2022." We present some of our UCaaS churn findings in this post.

At one end of the spectrum are the smallest UCaaS customers. They represent the tiny end of SMB, but account for the largest hosted UC market. These are typically small businesses with around 10 seats, or stations. Their monthly hosted UC churn rate averages a bit more than 0.7%. That's pretty low. Some hosted PBX vendors catering to small customers have lower churn. 8x8 and Vonage, for example, beat global churn averages for the SMB. This low churn rate is noteworthy considering the nature of small customers, which are renowned for moving offices, getting acquired, and even ceasing operations -- all churn-inducing activities.

As hosted PBX customer size increases, now the mid-market, churn drops by more than 50% compared to customers with 10 seats. So here we're looking at an average monthly churn of 0.3% based on our 2017 research of 3,500 customers.

Enterprise customers, say with 1,000 hosted PBX seats, have infinitesimal churn rates.

Digging Deeper Into Churn

Our research finds that UCaaS churn is a proxy for customer satisfaction. And hosted PBX customer satisfaction is high worldwide. Our survey shows 85% of users are satisfied or extremely satisfied with their cloud providers.

Vendors shouldn't gloat yet. Hosted PBX churn responds to competitive pressures, including promotional pricing targeting international long-distance callers, marketplace perception of vendor services, ability to provide high-quality customer care and network quality, and innovative products and services.

Because only a small portion of the total addressable market for hosted PBX has already moved to cloud, vendors and resellers may risk churn by jumping from sale to sale rather than taking steps to ward off future customer turnover.

Our customer satisfaction research on 10 distinct measures shows that most hosted PBX customers are satisfied with the technology that underpins the cloud service. They consider the product reliable. Customers report that their cloud installations went well. They consider hosted PBX, at $20 to $40 per month per seat, to have been a good buy. And 85% of all customers rank overall satisfaction as high. That's five of our 10 measures.

But vendors must address some weak links. A key general weakness is hosted PBX users require lots of support, and many customers have problems with what they receive. In a large organization, the IT department is right there to hand-hold cloud users and fix or explain things. Most SMBs don't have IT departments. So they look to the vendor for all support throughout the lifecycle journey. This is where the road can get bumpy.

Our customer survey shows 20% of hosted PBX customers are dissatisfied with their level 1 and 2 support experiences. Cloud providers often shoulder this support responsibility, backed up with a call center. However, the appropriate provider of support should be the channel partner that sold or took over the UC PBX installation. Here's why. The partner owns, or should own, the customer. The partner quite possibly made the initial sale, hopes to make follow-on sales, gets a monthly commission check on practically everything, and is the one throat to choke that customers want. Partners have manageable staffs, frequently a small contact center, and are positioned to provide intelligent local customer care.

From our recent customer surveys we know the primary driver of hosted PBX customer sales is cost. This is particularly true of the SMB. But should the driver not also be customer journey? Prospective UCaaS customers should inspect road conditions before the customer journey begins, since this is where breakdowns are most likely to occur. In other words, what are the level 1 and level 2 support experiences of other customers that have previously taken this path with a given vendor? Asking a provider this question is important. The Net Promoter Score may not reveal the answer, but a list of referenceable customers works wonders.


WhichVoIP.co.za is SA?s leading online Telecommunications comparison, information and news portal.
To get your business connected, click here and we will have leading providers get in contact with you!

Check out our comparison sections by clicking one of the options below.
?         Compare VoIP providers
?         Compare Hosted PBX solutions
?         Compare VoIP Handsets
?         Compare On-premise PBX systems
?         Compare Wireless Providers
?         Compare Fibre offerings