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Two-level model of customer retention in the US mobile telecommunications service market

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  • Seo, DongBack
  • Ranganathan, C.
  • Babad, Yair

Abstract

The unprecedented growth of competition in the wireless telecommunications market has raised the importance of retaining current customers. Retaining existing customers is much less expensive and difficult than recruiting new customers in a mature market such as the US wireless communications industry. In addition to the reduced cost, there is the potential and opportunity value of customers gained over a long period of time. Because wireless service is not a one-time sale like commodity products but rather, a continuous service, service providers can offer additional services over the length of a customer's tenure to generate more revenue. This study focuses on understanding the factors related to customer retention behavior, both behavioral factors such as switching costs and customer satisfaction and demographic factors. Its two goals are to understand (1) how factors that affect switching costs and customer satisfaction, such as length of association, service plan complexity, handset sophistication and the quality of connectivity, drive customer retention behavior, and (2) how customer demographics such as age and gender affect their choice of service plan complexity and handset sophistication, leading to differences in customer retention behavior. The methodologies used were a binary logistic regression model and a two-level hierarchical linear model.

Suggested Citation

  • Seo, DongBack & Ranganathan, C. & Babad, Yair, 0. "Two-level model of customer retention in the US mobile telecommunications service market," Telecommunications Policy, Elsevier, vol. 32(3-4), pages 182-196, April.
    • Handle: RePEc:eee:telpol:v:32:y::i:3-4:p:182-196
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    Cited by:

    1. Rahul, T. & Majhi, R., 2014. "An adaptive nonlinear approach for estimation of consumer satisfaction and loyalty in mobile phone sector of India," Journal of Retailing and Consumer Services, Elsevier, vol. 21(4), pages 570-580.
    2. Joaquim Majó & Daissy Moya & Laura Vall-llosera, 2017. "Impacto de las redes sociales en los ingresos de los hoteles en Colombia, Ecuador y Perú," Revista Facultad de Ciencias Económicas, Universidad Militar Nueva Granada, vol. 26(1), pages 147-162, December.
    3. 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.
    4. Joseph Mbawuni & Simon Gyasi Nimako, 2016. "Why Dissatisfied Mobile Subscribers Stay: Role of Service Use Experience, Commitment and Corporate Reputation," International Business Research, Canadian Center of Science and Education, vol. 9(6), pages 112-119, June.
    5. Magdalena Swart & Gerhard Roodt, 2015. "Market segmentation variables as moderators in the prediction of business tourist retention," Service Business, Springer;Pan-Pacific Business Association, vol. 9(3), pages 491-513, September.
    6. 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.
    7. Deng, Zhaohua & Lu, Yaobin & Wei, Kwok Kee & Zhang, Jinlong, 2010. "Understanding customer satisfaction and loyalty: An empirical study of mobile instant messages in China," International Journal of Information Management, Elsevier, vol. 30(4), pages 289-300.
    8. Guven, Faruk, 2018. "Churn and loyalty behaviour of Turkish digital natives," 29th European Regional ITS Conference, Trento 2018 184943, International Telecommunications Society (ITS).
    9. Tianyuan Zhang & Sérgio Moro & Ricardo F. Ramos, 2022. "A Data-Driven Approach to Improve Customer Churn Prediction Based on Telecom Customer Segmentation," Future Internet, MDPI, vol. 14(3), pages 1-19, March.
    10. 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.
    11. Srinuan, Pratompong & Srinuan, Chalita & Bohlin, Erik, 2014. "An empirical analysis of multiple services and choices of consumer in the Swedish telecommunications market," Telecommunications Policy, Elsevier, vol. 38(5), pages 449-459.
    12. Gurjeet Kaur & Ritika Sambyal, 2016. "Exploring Predictive Switching Factors for Mobile Number Portability," Vikalpa: The Journal for Decision Makers, , vol. 41(1), pages 74-95, March.
    13. Capponi, Giovanna & Corrocher, Nicoletta & Zirulia, Lorenzo, 2021. "Personalized pricing for customer retention: Theory and evidence from mobile communication," Telecommunications Policy, Elsevier, vol. 45(1).
    14. Andy Fred Wali, 2018. "Customer Relationship Management and Marketing Effectiveness," Paradigm, , vol. 22(2), pages 101-124, December.
    15. 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.
    16. Thomas Cadet & Sophie Larribeau & Thierry Pénard, 2012. "Network effects, Customer Satisfaction and Recommendation on the Mobile Phone Market," Economics Working Paper Archive (University of Rennes & University of Caen) 201242, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    17. 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.
    18. Quach, Thu Nguyen & Thaichon, Paramaporn & Jebarajakirthy, Charles, 2016. "Internet service providers' service quality and its effect on customer loyalty of different usage patterns," Journal of Retailing and Consumer Services, Elsevier, vol. 29(C), pages 104-113.
    19. Somosi, Agnes & Stiassny, Alfred & Kolos, Krisztina & Warlop, Luk, 2021. "Customer defection due to service elimination and post-elimination customer behavior: An empirical investigation in telecommunications," International Journal of Research in Marketing, Elsevier, vol. 38(4), pages 915-934.
    20. Sliż Piotr & Delińska Liwia, 2021. "Measuring Customer Retention in the European Automotive Sector," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 29(3), pages 63-85, September.

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