I would take a few minutes and explain the rules and give you some tips for calculating your own CRP rating.
First of all, lets look at how this program has changed since December of 2001 when it was introduced....
December 21st, 2002
<UL TYPE=SQUARE>
<LI>RED Customer Retention Index is greater than or equal to 5% (approximate annualized customer loss of 60%).
<LI>ORANGE Customer Retention Index is greater than or equal to 4% but less than 5% (approximate annualized customer loss of 48-60%);
OR
Customer Retention Index is greater than or equal to 5%, Inception Factor is less than 4% and the difference between Customer Retention Index and Inception Factor is greater than or equal to 2%.
<LI>YELLOW Customer Retention Index is greater than or equal to 3% and less than 4% (approximate annualized customer loss of 36-48%);
OR
Customer Retention Index is greater than or equal to 4% but less than 5%, Inception Factor is less than 3% and the difference between Customer Retention Index and Inception Factor is greater than or equal to 1.5%. Retailers in this category are encouraged to reduce churn to ensure that their CRI does not increase to the Orange or Red Categories where hardware costs increase.
<LI>WHITE Customer Retention Index is less than 3%. (approximate annualized customer loss of less than 36%)
[/list]
June 10th, 2002
<UL TYPE=SQUARE>
<LI>RED - Customer Retention Index is greater than or equal to 4.75% (approximate annualized customer greater than 57%)
<LI>ORANGE - Customer Retention Index is greater than or equal to 3.75% but less than 4.75%.(approximate annualized customer loss more than 45% but less than 57%)
OR
Customer Retention Index is greater than or equal to 4.75%, Inception Factor is less than 3.75% and the difference between Customer Retention Index and Inception Factor is greater than or equal to 2%.
<LI>YELLOW - Customer Retention Index is greater than or equal to 2% and less than 3.75%.(approximate annualized customer loss more than 24% but less than 45%)
OR
Customer Retention Index is greater than or equal to 3.75% but less than 4.75%, Inception Factor is less than 2.25% and the difference between Customer Retention Index and Inception Factor is greater than or equal to 1.5%.
<LI>WHITE - Customer Retention Index is less than 2%.(approximate annualized customer loss is less than 24%)
[/list]
January 1st, 2003
<UL TYPE=SQUARE>
<LI>RED - Customer Retention Index is greater than or equal to 4% (approximate annualized customer greater than 48%)
<LI>ORANGE - Customer Retention Index is greater than or equal to 3% but less than 4%.(approximate annualized customer loss more than 36% but less than 48%)
(Not sure what the inception factor is yet)
<LI>YELLOW - Customer Retention Index is greater than or equal to 1.6% and less than 3%.(approximate annualized customer loss more than 19.2% but less than 36%)
(Not sure what the inception factor is yet)
<LI>WHITE - Customer Retention Index is less than 1.6%.(approximate annualized customer loss is more than 12% but less than 19.2%)
<LI>GREEN - Customer Retention Index is less than 1%. (approximate annualized customer loss is less than 12%)
[/list]
May 20th 2003
<UL TYPE=SQUARE>
<LI>RED - Customer Retention Index is greater than or equal to 4% (approximate annualized customer greater than 48%)
<LI>ORANGE - Customer Retention Index is greater than or equal to 3% but less than 4%.(approximate annualized customer loss more than 36% but less than 48%)
(Not sure what the inception factor is yet)
<LI>YELLOW - Customer Retention Index is greater than or equal to 1.6% and less than 3%.(approximate annualized customer loss more than 19.2% but less than 36%)
(Not sure what the inception factor is yet)
<LI>WHITE - Customer Retention Index is less than 1.5%.(approximate annualized customer loss is more than 12% but less than 18%)
<LI>GREEN - Customer Retention Index is less than 1%. (approximate annualized customer loss is less than 12%)
[/list]
Does anyone notice a trend here????
Customer Retention Index
This is probably the most hardest part for retailers to figure out, but its actually quite easy to figure out. The first part in determining your customer index is to figure out the Applicable Customer Base for the month your trying to calculate.
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Applicable Customer Base
The term "Applicable Customer Base" shall mean, with respect to a particular month (the "Applicable Month"), the number of Subscribers (i) whose original activation date is more than one month and no more than twelve months prior to the last day of the month immediately preceding the Applicable Month, and (ii) whose DISH Network account is active on the last day of the month immediately preceding the Applicable Month. For example, the Applicable Customer Base for October 2001 would be equal to the number of Subscribers whose original activation dates are between and including October 2000 and August 2001 and whose DISH Network accounts are active on September 30, 2001.
<HR></BLOCKQUOTE>
Please note that the figure for the Applicable Customer Base is for the previous 12 months. It is not 12 months from todays date, but 12 months back from the period that you are trying to figure out. In addition this is a count of all your
ACTIVE customer accounts you have signed up in the last 12 months.
Once you have figured out how many customers you have for a paticular month, then you need to determine how many customers disconnected service in that month and how many customers reconnected.
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Disconnects
The term "Disconnect" shall mean a Subscriber who disconnects their DISH Network programming service for any reason, permanent or temporary, or whose DISH Network programming service is disconnected by EchoStar for failure to pay amounts past due or other non-compliance with the Residential Customer Agreement or any other agreement with EchoStar.
<HR></BLOCKQUOTE>
These are basically all your customers who haven't paid their bill and disconnected service in a paticular month. In not 100% sure, but I believe a customer actually has to be disconnected for more than 30 days for it to count as a disconnect and negativly effect your CRP. Please note that once a customer disconnects it will only count agenst you once, since this customer is no longer part of your Disconnects since they will no longer be considered part of your Applicable Customer Base when you calculate the following months Customer Retention Index.
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Restarts
The term "Restart" shall mean a Disconnect that later reactivates the appropriate level of DISH Network programming required under any agreement between EchoStar and the applicable Subscriber.[/b]
<HR></BLOCKQUOTE>
This would simply be a count of all the customers who you installed in the past 12 months for the period your calculating and have reconnected their services.
From this point, you simply subtract all the reconnects, from the number of disconnects and this will determine the net number of customers you lost for a paticular month. Once you have determined how many customers you have lost, just figure that out as a percent over the Applicable Customer base.
For example, lets say you had 1000 customers as your applicable customer base. 20 customers Disconnected, however 10 customers reconnected. This would mean you lost 10 customers in this paticular month, which means you lost approxamatly 1% of your total customer base. From this point you figure out your chrun for past 6 months and figure out the average.
As far as the Inception factor is concerned, its preety much the same as the customer retention index but instead Dish is looking at a retailers churn accross their entire customer base. The only reason why they are doing this is to protect the large volume retailers. Heres why....
Lets say I was VMC Satellite and had a applicable customer base of lets say 100,000 customers. By using the inception factor, Dish isn't looking at the 12,000 customers VMC might have signed up in the past 12 months, but is now looking at the entire picture. The reason why the inception factor helps out the bigger retailers is because once a customer has made it past 12-14 months, and have fulfilled their contract with Dish they are less likely to churn than a customer who was installed 8 months ago.
For example, how many customers do you still have that are paying residuals from 1998? Probably not very many, but the fact of the matter is that in another 4 years, these customers will probably still be active paying customers.
So instead of looking at churn from a 12 month period, where the customer base is still very unstable, this allows these retailers to use their good long term paying customers to help calculate their CRP rating.
So basically its taking some of these larger retailers who might otherwise been Orange and brought them down to Yellow, so they can continue to stay in business and get away with having a higher churn rate than a smaller dealer like myself.
Things you should know
Have you noticed that when Dish plans to recalculate CRP, it will be up to September 2002? They do this because if they used your customer base from lets say November your churn would actually be much lower since it usually takes about 3 months for an account to be disconnected for Non-Payment of the first bill.
Todays Charlie Chat with the new CRP enahncements and the new categorys was simply to shut us all up while the prepare to squeeze out more retailers. For months we have all *****ed about the CRP program stating that there is absolutly no incentive for the retailers who have good customer retention and service their customers.
$5 Incentive per additional Activation if your Yellow
$20 Incentive Per additional Activation if your White
$40 Incentive per additional Activation if your Green
So what they are now paying us an additional incentive, have we all forgotten how much we have been nicked and dimed over the past year? Hmm, lets not forget DHP credit scoring which started out at $2.50 per customer, how about the $15 reduction in DHP payments on a (4) reciever installaton, lets not forget when we got penalized $50 for using a New 301 for FREE Dish earlier this year or when we sign up a Club Dish customer and what about the $60 fee we must pay to now keep our Showroom recievers active!!!
So now we are getting paid for good retention, but how much have you been nickled and dimed over the past year?
On Todays chat, everyone was so excited to see the additional incentives they failed to notice Dish once again tightened CRP ratings making it even harder to be a retailer in good standing. Hell, I wouldn't have even caught it myself till January if I wouldn't have went back with my PVR and looked at the new categories again!!!
So why should I care, what does this mean to me
If you currently are a white retailer, chances are your probably going to be classified as yellow in January after they make changes to the business rules again. Second of all, even if you do remain white, Dish did it to you again by coming up with the GREEN CRP category which will pay a higher incentive. I really can't complain about GREEN, but how many retailers do you think are really going to be classifed as GREEN? The few dealers who will be classified as Green will benifit from this, but the way I look at it is that they just lowered the incentive for all the retailers who will remain white.
Did anyone else also notice that Team Summit Registration is now $150 this year? Someone has got to pay for the retailers who are going for FREE. Last year I think it was either $100 or $120.
The thing that pisses me off here, is that retailers who are currently yellow, could now possibly be Orange but nobody is going to take much notice of this because they are too busy counting their additional incentive payments.
I write this thread not because im a Red or an Orange Retailer, but because im a Yellow Retailer with 2.2% churn. When the CRP figures came out in June 2002, I was a bit surprised to see I was yellow and decided to be a little more selective in the customers I was signing up. We made it policy not to sign up customers without credit cards, and preety much focused on selling 100% DHP to customers with good credit. My hope was that by January my churn would have been below 2% which would have classified me as a white retailer again under the old business rules.
I honestly don't know where I'll be in January, but looking at the way Dish keeps changing the business rules on the CRP program every 3 months, by the time I get my churn down to 1.6% to be a white retailer again, I still may be classified as yellow!
BTW, its now May 13th and im now classified as Green with less than 1% churn
Oh you might also try using spellcheck.
