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Predicting Customer Churn and Retention Rates in Nigeria’s Mobile Telecommunication Industry Using Markov Chain Modelling

Author

Listed:
  • Adebiyi Sulaimon Olanrewaju

    (Department of Business Administration, Federal University of Agriculture Abeokuta (FUNAAB), PMB 2240. Abeokuta, Ogun State. Nigeria)

  • Oyatoye Emmanuel Olateju

    (Department of Business Administration, University of Lagos, Akoka, Lagos. Nigeria.)

  • Mojekwu Joseph Nnamdi

    (Department of Actuarial Science and Insurance, University of Lagos, Akoka, Lagos. Nigeria.)

Abstract

The telecommunication industry is one of the service industries that is most affected by the problem of subscribers’ churn. Although several techniques have been used to predict customer churn in developed countries, many of those studies used secondary data which are not readily available in Nigeria for researchers. This study investigates how Markov chains help in modelling and predicting the customer churn and retention rate in the Nigerian mobile telecommunication industry. The data generated through the survey were input in the Windows-based Quantitative System for Business (WinQSB) for analysis. The results reveal that in the study area MTN has the highest retention rate (86.11%), followed by GLO (70.51%), Airtel (67%), and Etisalat (67.5%). This result has implications for telecom firms’ strategies for competitive advantage in particular and survival in general.

Suggested Citation

  • Adebiyi Sulaimon Olanrewaju & Oyatoye Emmanuel Olateju & Mojekwu Joseph Nnamdi, 2015. "Predicting Customer Churn and Retention Rates in Nigeria’s Mobile Telecommunication Industry Using Markov Chain Modelling," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 3(1), pages 67-80.
    • Handle: RePEc:vrs:auseab:v:3:y:2015:i:1:p:67-80:n:1004
    DOI: 10.1515/auseb-2015-0004
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    More about this item

    Keywords

    Markov chain; customer churn; customer retention; market share; marketing strategies;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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