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

Jae Hyeon Ahn, Sang Pil Han, Yung Seop Lee

Research output: Contribution to journalArticle

150 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)552-568
Number of pages17
JournalTelecommunications Policy
Volume30
Issue number10-11
DOIs
StatePublished - Nov 1 2006
Externally publishedYes

Keywords

  • Business strategy
  • Customer churn
  • Customer retention
  • Mediation effect
  • Mobile telephone service
  • Partial defection

ASJC Scopus subject areas

  • Human Factors and Ergonomics
  • Information Systems
  • Electrical and Electronic Engineering

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