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Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry

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  • Ahn, Jae-Hyeon
  • Han, Sang-Pil
  • Lee, Yung-Seop

Abstract

Retaining customers is one of the most critical challenges in the maturing mobile telecommunications service industry. Using customer transaction and billing data, this study investigates determinants of customer churn in the Korean mobile telecommunications service market. Results indicate that call quality-related factors influence customer churn; however, customers participating in membership card programs are also more likely to churn, which raises questions about program effectiveness. Furthermore, heavy users also tend to churn. In order to analyze partial and total defection, this study defines changes in a customer's status from active use (using the service on a regular basis) to non-use (deciding not to use it temporarily without having churned yet) or suspended (being suspended by the service provider) as partial defection and from active use to churn as total defection. Thus, mediating effects of a customer's partial defection on the relationship between the churn determinants and total defection are analyzed and their implications are discussed. Results indicate that some churn determinants influence customer churn, either directly or indirectly through a customer's status change, or both; therefore, a customer's status change explains the relationship between churn determinants and the probability of churn.

Suggested Citation

  • Ahn, Jae-Hyeon & Han, Sang-Pil & Lee, Yung-Seop, 0. "Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry," Telecommunications Policy, Elsevier, vol. 30(10-11), pages 552-568, November.
  • Handle: RePEc:eee:telpol:v:30:y::i:10-11:p:552-568
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    Cited by:

    1. Uner, M.Mithat & Guven, Faruk & Cavusgil, S.Tamer, 2020. "Churn and loyalty behavior of Turkish digital natives: Empirical insights and managerial implications," Telecommunications Policy, Elsevier, vol. 44(4).
    2. Machowska Dominika, 2018. "Investigating the role of customer churn in the optimal allocation of offensive and defensive advertising: the case of the competitive growing market," Economics and Business Review, Sciendo, vol. 4(2), pages 3-23, June.
    3. Bogomolova, Svetlana, 2016. "Determinants of ex-customer winback in financial services," Journal of Retailing and Consumer Services, Elsevier, vol. 32(C), pages 1-6.
    4. Yan Dong & Moonwon Chung & Chen Zhou & Sriram Venkataraman, 2019. "Banking on “Mobile Money”: The Implications of Mobile Money Services on the Value Chain," Manufacturing & Service Operations Management, INFORMS, vol. 21(2), pages 290-307, May.
    5. Gerpott, Torsten J. & Ahmadi, Nima & Weimar, Daniel, 2015. "Who is (not) convinced to withdraw a contract termination announcement? – A discriminant analysis of mobile communications customers in Germany," Telecommunications Policy, Elsevier, vol. 39(1), pages 38-52.
    6. Ilisa Fajriyati & Adi Zakaria Afiff & Gita Gayatri & Sri Rahayu Hijrah Hati, 2022. "Attributes Influencing Overall Tourist Satisfaction and Its Consequences for Muslim-Majority Destination," SAGE Open, , vol. 12(1), pages 21582440211, January.
    7. Mithat Üner, M. & Güven, Faruk & Tamer Cavusgil, S., 2015. "Bundling of telecom offerings: An Empirical Investigation in the Turkish market," Telecommunications Policy, Elsevier, vol. 39(1), pages 53-64.
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    9. Jiban Khuntia & Raveesh Mayya & Sunil Mithas & Ritu Agarwal, 2021. "Managing Cellphone Services for Customer Satisfaction: Evidence from the Base‐of‐the‐Pyramid Markets," Production and Operations Management, Production and Operations Management Society, vol. 30(2), pages 438-450, February.
    10. Soomro, Yasir & Al-Sehli, Ahmed Nafe, 2020. "Determinants of Customer Churn: An Empirical Study Of Cellular Subscribers From Saudi Arabia," MPRA Paper 101398, University Library of Munich, Germany.
    11. García-Mariñoso, Begoña & Suárez, David, 2019. "Switching mobile operators: Evidence about consumers’ behavior from a longitudinal survey," Telecommunications Policy, Elsevier, vol. 43(5), pages 426-433.
    12. Luis Miranda-Gumucio & Ignacio Gil-Pechuán & Daniel Palacios-Marqués, 2013. "An exploratory study of the determinants of switching and loyalty in prepaid cell phone users. An application of concept mapping," Service Business, Springer;Pan-Pacific Business Association, vol. 7(4), pages 603-622, December.
    13. Usero Sánchez, Belén & Asimakopoulos, Grigorios, 2012. "Regulation and competition in the European mobile communications industry: An examination of the implementation of mobile number portability," Telecommunications Policy, Elsevier, vol. 36(3), pages 187-196.
    14. Gerpott, Torsten J. & Meinert, Phil, 2018. "Termination notice of mobile network operator customers after a tariff switch: An empirical study of postpaid subscribers in Germany," Telecommunications Policy, Elsevier, vol. 42(3), pages 212-226.
    15. Guven, Faruk, 2018. "Churn and loyalty behaviour of Turkish digital natives," 29th European Regional ITS Conference, Trento 2018 184943, International Telecommunications Society (ITS).
    16. Toni Lupo & Seyyed Ali Delbari, 2018. "A knowledge-based exploratory framework to study quality of Italian mobile telecommunication services," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 68(1), pages 129-144, May.
    17. Li, Yixin & Hou, Bingzhang & Wu, Yue & Zhao, Donglai & Xie, Aoran & Zou, Peng, 2021. "Giant fight: Customer churn prediction in traditional broadcast industry," Journal of Business Research, Elsevier, vol. 131(C), pages 630-639.
    18. Capponi, Giovanna & Corrocher, Nicoletta & Zirulia, Lorenzo, 2021. "Personalized pricing for customer retention: Theory and evidence from mobile communication," Telecommunications Policy, Elsevier, vol. 45(1).
    19. Han Wang & Damien Fay & Kenneth N. Brown & Liam Kilmartin, 2016. "Modelling revenue generation in a dynamically priced mobile telephony service," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 62(4), pages 711-734, August.
    20. Ken Kwong-Kay Wong, 2009. "Fighting churn with rate plan right-sizing: a customer retention strategy for the wireless telecommunications industry," The Service Industries Journal, Taylor & Francis Journals, vol. 30(13), pages 2261-2271, August.
    21. Lim, Chulmin, 2021. "Examining factors affecting local IPTV users’ intention to subscribe to global OTT service through their local IPTV service," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238036, International Telecommunications Society (ITS).
    22. Chang-Gyu Yang & Silvana Trimi & Sang-Gun Lee & Joon-Sun Yang, 2017. "A Survival Analysis of Business Insolvency in ICT and Automobile Industries," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 16(06), pages 1523-1548, November.
    23. Seung Hwan (Shawn) Lee, 2019. "An Exploration of Initial Purchase Price Dispersion and Service-Subscription Duration," Sustainability, MDPI, vol. 11(9), pages 1-14, April.

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