The effect of friends’ churn on consumer behavior in mobile networks
| Autor: | Miguel Godinho de Matos, Rahul Telang, Pedro Ferreira |
|---|---|
| Přispěvatelé: | Veritati - Repositório Institucional da Universidade Católica Portuguesa |
| Jazyk: | angličtina |
| Rok vydání: | 2019 |
| Předmět: |
Information Systems and Management
Tariff plans ComputerSystemsOrganization_COMPUTER-COMMUNICATIONNETWORKS 05 social sciences Tariff Advertising 02 engineering and technology Plan (drawing) Management Science and Operations Research Computer Science Applications Management Information Systems 020204 information systems 0502 economics and business 0202 electrical engineering electronic engineering information engineering Contagious churn 050211 marketing Telecommunications industry Business Mobile churn Consumer behaviour Telecommunications tariffs MathematicsofComputing_DISCRETEMATHEMATICS |
| Zdroj: | Repositório Científico de Acesso Aberto de Portugal Repositório Científico de Acesso Aberto de Portugal (RCAAP) instacron:RCAAP |
| ISSN: | 1557-928X 0742-1222 |
| DOI: | 10.1080/07421222.2019.1598683 |
| Popis: | We study how consumers decide which tariff plan to choose and whether to churn when their friends churn in the mobile industry. We develop a theoretical model showing conditions under which users remain with their carrier and conditions under which they churn when their friends do. We then use a large and rich anonymized longitudinal panel of call detailed records to characterize the consumers’ path to death with unprecedented level of detail. We explore the structure of the network inferred from these data to derive instruments for friends’ churn, which is typically endogenous in network settings. This allows us to econometrically identify the effect of peer influence in our setting. On average, we find that each additional friend that churns increases the monthly churn rate by 0.06 percent. The observed monthly churn rate across our dataset is 2.15 percent. We also find that firms introducing the pre-paid tariff plans that charge the same price to call users inside and outside the carrier help retain consumers that would otherwise churn. In our setting, without this tariff plan the monthly churn rate could have been as high as 8.09 percent. We perform a number of robustness checks, in particular to how we define friends in the social graph, and show that our results remain unchanged. Our paper shows that the traditional definition of customer lifetime value underestimates the value of consumers and, in particular, that of consumers with more friends due to the effect of contagious churn and, therefore, managers should actively take into account the structure of the social network when prioritizing whom to target during retention campaigns. |
| Databáze: | OpenAIRE |
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