SHARE



ABOUT THE AUTHOR


John Malone
John Malone is the President and CEO of The Eastern Management Group. He heads one of the world's premier communications...
Read Full Bio >>
SHARE



John Malone | January 04, 2018 |

 
   

Hosted PBX Churn: 'Infinitesimal' Among Enterprises

Hosted PBX Churn: 'Infinitesimal' Among Enterprises Eastern Management Group finds churn acceptable at all customer levels, but sees room to make a good thing better for SMBs.

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.

This is the fourth in an eight-part biweekly series featuring research from Eastern Management Group's exhaustive "Worldwide Hosted PBX Market 2017-2022" report. For questions about the hosted PBX study please ask Eastern Management Group researchers, and see our earlier posts:

Learn more about Cloud Communications at Enterprise Connect 2018, March 12 to 15, in Orlando, Fla. Register now using the code NOJITTER to save an additional $200 off the Advance Rate or get a free Expo Plus pass.





COMMENTS




May 23, 2018

If Cisco is a critical strategic supplier for you, then its vital for you to understand the most recent announcements around Webex Teams, and how to build your migration path for the next generatio

April 25, 2018

Yesterdays simple phone call to a contact center or business location is rapidly becoming todays interactive session, spanning multiple channels and devices. If you need to know how Omnichannel can

March 7, 2018

Video collaboration is experiencing significant change and innovation-how can your enterprise take advantage? In this webinar, leading industry analyst Ira Weinstein will present detailed analysis

March 12, 2018
An effective E-911 implementation doesn't just happen; it takes a solid strategy. Tune in for tips from IT expert Irwin Lazar, of Nemertes Research.
March 9, 2018
IT consultant Steve Leaden lays out the whys and how-tos of getting the green light for your convergence strategy.
March 7, 2018
In advance of his speech tech tutorial at EC18, communications analyst Jon Arnold explores what voice means in a post-PBX world.
February 28, 2018
Voice engagement isn't about a simple phone call any longer, but rather a conversational experience that crosses from one channel to the next, as Daniel Hong, a VP and research director with Forrester....
February 16, 2018
What trends and technologies should you be up on for your contact center? Sheila McGee-Smith, Contact Center & Customer Experience track chair for Enterprise Connect 2018, gives us the lowdown.
February 9, 2018
Melanie Turek, VP of connected work research at Frost & Sullivan, walks us through key components -- and sticking points -- of customer-oriented digital transformation projects.
February 2, 2018
UC consultant Marty Parker has crunched lots of numbers evaluating UC options; tune in for what he's learned and tips for your own analysis.
January 26, 2018
Don't miss out on the fun! Organizer Alan Quayle shares details of his pre-Enterprise Connect hackathon, TADHack-mini '18, showcasing programmable communications.
December 20, 2017
Kevin Kieller, partner with enableUC, provides advice on how to move forward with your Skype for Business and Teams deployments.
December 20, 2017
Zeus Kerravala, principal analyst with ZK Research, shares his perspective on artificial intelligence and the future of team collaboration.
December 20, 2017
Delanda Coleman, Microsoft senior marketing manager, explains the Teams vision and shares use case examples.
November 30, 2017
With a ruling on the FCC's proposed order to dismantle the Open Internet Order expected this month, communications technology attorney Martha Buyer walks us through what's at stake.
October 23, 2017
Wondering which Office 365 collaboration tool to use when? Get quick pointers from CBT Nuggets instructor Simona Millham.
September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.