Application of System Dynamics to Mobile Telecommunication Customer Churn Management

Abstract

In the mobile telecommunication industry, customer churn can be caused by factors which may arise from the interaction of subscribers with products and services or even employees of Mobile Network Operators (MNOs). If customer churn is not managed and prevented in good time, it can lead to significant loss of revenues and possibly make a business crumble. Most of the churn management strategies in use today segment mobile customers depending on factors such as their usage pattern and tenure to run prediction models or algorithms that keep the balance between churn rates and revenues. The data used in this study was collected from 700 mobile subscribers from 3 provinces of Zambia. This study combines factors that lead to customer churn, strategies of MNOs on churn management and demographic data collected from Central Statistical Office (CSO) and the Zambia ICT Agency (ZICTA) into a system dynamics simulation model. The result of this simulation shows that system dynamics can be used in making informed decisions to proactively manage customer churn.