OCT 18, 2005 1:00am ET

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Understanding the Relationship Between Loyalty and Churn

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In recent years, the mobile industry focused heavily on the acquisition of new customers and the fight for market share. On a global basis, mobile operators have been willing to pay significant amounts to secure each customer relationship. A Dutch Telecom paid almost $14,000 per customer for its entry into the U.S. market, and a British mobile operator paid nearly $15,000 for each customer after a tough takeover battle. At the same time, revenue from voice products fell and revenue from data products failed to meet expectations. Together with high churn rates and short customer relationships, the effect on the share market evaluation of many operators has been highly negative.

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