Improved Customer Churn and Retention Decision Management Using Operations Research Approach

Abstract

The relevance of operations research cannot be overemphasized, as it provides the best possible results in any given circumstance, through analysis of operations and the use of scientific method thus, this paper explore the combination of two operations research models (analytic hierarchy process and Markov chain) for solving subscribers’ churn and retention problem peculiar to most service firms. A conceptual model for unraveling the problem customer churn and retention decision management was proposed and tested with data on third level analysis of AHP for determining appropriate strategies for customer churn and retention in the Nigeria telecommunication industries. A survey was conducted with 408 subscribers; the sample for the study was selected through multi-stage sampling. Two analytical tools were proposed for the analysis of data. These include: Expert Choice/Excel Solver (using Microsoft Excel) and Windows based Quantitative System for Business (WinQSB). This paper plays important role in understanding various strategies for effective churn and retention management and the ranking of churn and retention drivers in order of importance to stakeholders` decision-making. The study provided a framework for understanding the application of AHP and Markov chain for modeling, analysing and proffering solution to problem of churn and retention. The study recommends organizational strategies (corporate, business and functional) that reverse the churn alternatives with high priority and equally strengthen service delivery on high priority retention alternatives in order to ensure firms sustainable competitive advantage. An erratum to this article has been published as https://doi.org/10.5195/emaj.2017.131.