A study on customer retention strategies for the wireless telecommunication service providers at the introduction of MNP

Abstract

Wireless telecommunication market in Korea has grown very dramatically recently and the number of wireless telecommunication subscribers is over that of wired telephone subscribers. Many researchers estimate that the wireless telecommunication market in Korea is approaching the level of saturation. Therefore, customer retention is a more important issue than the acquisition of new customers for wireless telecommunication service providers. Furthermore, with adoption of MNP (Mobile Number Portability), customers can easily change their wireless telecommunication service providers while retaining their original dialed number. The main objective of this study is to construct a customer retention model by (1) extracting the statistically significant determinants that influence the out-bounding churn and in-bounding churn separately and (2) ranking the importance of sub-factors to minimize out-bounding chum and satisfy in-bounding churn customers. This model is applied to one domestic wireless telecommunication service providers, "A", and the consequence of this study. The following observations have been identified: (1) There are considerable discrepancies between the service satisfaction of out-bounding churn and customers remaining after MNP. This implies that customers who are less satisfied with the service show a higher tendency to change service providers, indicating that low service satisfaction is highly related to the out- bounding churn. (2) Through the logistic regression analysis, appropriate service charges and supplementary services are statistically significant determinants of out-bounding churn while brand image and speech quality are statistically significant determinants of in- bounding churn. This shows that the significant determinants of out-bounding churn and in-bounding churn are different. Through discriminant analysis, it is shown that appropriate service charges influence the out-bounding churn more than supplementary services. It i...