Analysis of Churn in Mobile Telecommunications: Predicting the Timing of Customer Churn

Abstract

Attrition, or churn, at a Venezuelan mobile telecommunications company was examined using survival analysis. Main contributors to predicting churn were total number of message calls, subscription tenure, and account tenure. Three measures were generated for each account holder: 1) mean residual lifetime, 2) risk of attrition, and 3) customer lifetime value. Customer lifetime value is particularly useful for management in deciding how much to spend to encourage the account holder to stay with the mobile telecommunications company. A company may decrease the probability of a customer leaving by encouraging the customer to enter a loyalty program.