Modeling Customer Lifetimes with Multiple Causes of Churn

Customer retention and customer churn are key metrics of interest to marketers, but little attention has been placed on linking the different reasons for which customers churn to their value to a contractual service provider. In this paper, we put forth a hierarchical competing-risk model to jointly model when customers choose to terminate their service and why. Some of these reasons for churn can be influenced by the firm (e.g., service problems or price–value trade-offs), but others are uncontrollable (e.g., customer relocation and death). Using this framework, we demonstrate that the impact of a firm's efforts to reduce customer churn for controllable reasons is mitigated by the prevalence of uncontrollable ones, resulting in a “damper effect” on the return from a firm's retention marketing efforts. We use data from a provider of land-based telecommunication services to demonstrate how the competing-risk model can be used to derive a measure of the incremental customer value that a firm can expect to accrue through its efforts to delay churn, taking this damper effect into account. In addition to varying across customers based on geodemographic information, the magnitude of the damper effect depends on a customer's tenure to date. We discuss how our framework can be used to tailor the firm's retention strategy to individual customers, both in terms of which customers to target and when retention efforts should be deployed

An Empirical Investigation of Customer Retention: Addressing Unique Challenges in Customer-Firm Relationships

Effective customer retention is vital to the survival and prosperity of any customer-centric organization. Systematic examination of different aspects of the customer’s relationship with the firm has the potential to provide valuable insights to support retention efforts. However, the nature of the purchasing options and relationship patterns inherent in each industry require managers to shift their focus on varied aspects of the relationship, thus posing unique challenges. One such challenge is examined in the first essay of this dissertation, in a setting where customer-firm relationships are intermittent, with customers being lost to and won back again by the firm. A unifying model for joint estimation of the customers’ second lifetime duration, multiple repeat churn reasons, and heterogeneity in exhibiting a related churn reason is developed to study this relationship. The findings support the existence of a cured group of returning customers, defined as those who are not susceptible to churn due to a repeated reason. Another challenge is examined in the second essay, which involves a setting where the structure of the purchasing options is a combination of contractual and noncontractual services. The complexities and dynamics of the customer-firm relationship and customers’ underlying commitment to it are modeled through a hidden Markov model, incorporating the dependency between the two purchase processes. The findings suggest that contractual and noncontractual purchase behaviors are distinct but interrelated

Customer Churn Prediction in Telecom Sector: A Survey and way a head

© 2021 International Journal of Scientific & Technology Research. This work is licensed under a Creative Commons Attribution 4.0 International License.The telecommunication (telecom)industry is a highly technological domain has rapidly developed over the previous decades as a result of the commercial success in mobile communication and the internet. Due to the strong competition in the telecom industry market, companies use a business strategy to better understand their customers’ needs and measure their satisfaction. This helps telecom companies to improve their retention power and reduces the probability to churn. Knowing the reasons behind customer churn and the use of Machine Learning (ML) approaches for analyzing customers' information can be of great value for churn management. This paper aims to study the importance of Customer Churn Prediction (CCP) and recent research in the field of CCP. Challenges and open issues that need further research and development to CCP in the telecom sector are exploredPeer reviewe

A Predictive Analytic Model for Value Chain Management

Value chain management has gone through various stages of automation, integration and optimization in the past decades. While an optimization model for value chain deals with business scenarios under known circumstances, a predictive value chain model deals with probable circumstances in the future. Predictive analytics is succeeding optimization in the evolution of technologies supporting value chain management. This paper proposes a forward looking value creation model that combines the important concepts of value chain management and predictive analytics. An enterprise model for value chain predictive analytics that facilitates the convergence of information, operations and analytics is presented

Modelling partial customer churn in the Portuguese fixed telecommunications industry by using survival models

Considering that profits from customer relationships are the lifeblood of firms (Grant and Schlesinger, 1995), an improvement on the customer management is essential to ensure the competitivity and success of firms. For the last decade, Portuguese customers of fixed telecommunications industry have easily switched the service provider, which has been very damaging for the business performance and, therefore, for the economy. The main objective of this study is to analyse the partial churn of residential customers in the fixed-telecommunications industry (fixed-telephone and ADSL), by using survival models. Additionally, we intend to test the assumption of constant customer retention rate over time and across customers. Lastly, the effect of satisfaction on partial customer churn is analysed. The models are developed by using large-scale data from an internal database of a Portuguese fixed telecommunications company. The models are estimated with a large number of covariates, which includes customer’s basic information, demographics, churn flag, customer historical information about usage, billing, subscription, credit, and other. Our results show that the variables that influence the partial customer churn are the service usage, mean overall revenues, current debts, the number of overdue bills, payment method, equipment renting, the existence of flat plans and the province of the customer. Portability also affects the probability of churn in fixed-telephone contracts. The results also suggest that the customer retention rate is neither constant over time nor across customers, for both types of contracts. Lastly, it seems that satisfaction does not influence the cancellation of both types of contracts.Considerando que os lucros gerados pelos clientes são vitais para as empresas (Grant e Schlesinger, 1995), uma melhoria na gestão do cliente é fundamental para assegurar a competitividade e o sucesso das empresas. Na última década, os clientes portugueses das empresas de telecomunicações fixas têm mudado de operador com demasiada facilidade, o que tem prejudicado o desempenho das empresas e, consequentemente, a economia. O principal objectivo deste estudo é analisar o cancelamento de contratos de telefone fixo e ADSL por clientes residenciais, através do uso de modelos de sobrevivência. Para além disso, pretende-se testar o pressuposto de que a taxa de retenção de clientes é constante ao longo do tempo e entre clientes. Por último, pretende-se analisar o efeito da satisfação do cliente no cancelamento destes tipos de contratos. Os modelos são construídos com base numa base de dados de larga escala fornecida por uma empresa portuguesa deste sector. Os modelos são estimados com base num vasto número de variáveis, incluindo informação básica sobre o cliente, dados demográficos, indicação sobre o cancelamento do contrato, dados históricos sobre o uso dos serviços, facturação, contracto, crédito, etc.. Os resultados mostram que as variáveis que influenciam o cancelamento de ambos os tipos de contratos são o uso do serviço, a facturação média, o valor em dívida, o número de facturas em dívida, o método de pagamento, o método de pagamento do equipamento, a existência de tarifas planas e o distrito do cliente. A portabilidade de número parece influenciar o cancelamento de contratos de telefone fixo. Os resultados também mostram que a taxa de retenção de clientes não é constante ao longo do tempo nem entre clientes em ambos os tipos de contratos. Por último, parece que a satisfação não influencia o cancelamento de ambos os tipos de contratos

Forecasting Employee Turnover in Large Organizations

Researchers and human resource departments have focused on employee turnover for decades. This study developed a methodology forecasting employee turnover at organizational and departmental levels to shorten lead time for hiring employees. Various time series modeling techniques were used to identify optimal models for effective employee-turnover prediction based on a large U.S organization\u27s 11-year monthly turnover data. A dynamic regression model with additive trend, seasonality, interventions, and a very important economic indicator efficiently predicted turnover. Another turnover model predicted both retirement and quitting, including early retirement incentives, demographics, and external economic indicators using the Cox proportional hazard model. A variety of biases in employee-turnover databases along with modeling strategies and factors were discussed. A simulation demonstrated sampling biases\u27 potential impact on predictions. A key factor in the retirement was achieving full vesting, but employees who did not retire immediately maintain a reduced hazard after qualifying for retirement. Also, the model showed that external economic indicators related to S&P 500 real earnings were beneficial in predicting retirement while dividends were most associated with quitting behavior. The third model examined voluntary turnover factors using logistic regression and forecasted employee tenure using a decision tree for four research and development departments. Company job title, gender, ethnicity, age and years of service affected voluntary turnover behavior. However, employees with higher salaries and more work experience were more likely to quit than those with lower salaries and less experience. The result also showed that college major and education level were not associated with R&D employees\u27 decision to quit

The business and dynamics of free-to-play social-casual game apps

Thesis (S.M. in Engineering and Management)--Massachusetts Institute of Technology, Engineering Systems Division, 2012.Cataloged from PDF version of thesis.Includes bibliographical references (p. 95-100).The rapid growth of social media platforms, specifically Facebook, has caused startup firms to develop new business models based on social technologies. By leveraging the Facebook platform, new entertainment companies making free-to-play social-casual games have created a multi-billion dollar market for virtual goods, a revenue model in which the core product is given away for free and ancillary goods are sold on top of it. Zynga, the most successful firm in this space, held the largest initial public offering for an Internet-based company since Google in 2004. However, concerns about Zynga's longevity (as well as the longevity of other social-oriented firms, including Groupon) persist for a variety of reasons, including the novelty of its business model, the dependence on hit products with short lifecycles, and the stress placed on internal development teams. This thesis analyzes some of the key problems faced by Zynga and its competitors, including how to monetize free products, how to maintain a user base over time (using platform strategy concepts), and how to develop short and long-term product management and new product development policies (using System Dynamics). An additional chapter develops principles for launching social platforms and products by comparing and contrasting key factors that influenced the growth of five major social media websites. The principles are then discussed as they pertain to Zynga and social-casual gaming, in which case there are notable applications and key exceptions based on Zynga's circumstances. The thesis concludes by discussing several future areas of research that pertain to the socialization of products and technology.by Thomas Hughes Speller, III.S.M.in Engineering and Managemen

Data mining guided process for churn prediction in retail: from descriptive to predictive analytics

Dissertation presented as the partial requirement for obtaining a Master's degree in Information Management, specialization in Information Systems and Technologies ManagementIn recent years, the development of new technologies has permeated all industries, and with its rapid introduction, technology has brought the need to solve uncertainty in processes. The need to understand and collect data by companies has become a central paradigm, but the journey continues in the efforts to transform it into powerful insight into new processes, goods, and services. In the grocery retail industry has been essential to understanding the need to include academic research to understand different commercial purposes (Perloff & Denbaly, 2007). It has become an essential issue to understand the data coming from all the sources in the industries, allowing to focus the efforts to reduce the gap between the vertical and horizontal relationships and from the different stakeholders in the supply chain. That is why it became relevant to understand the customer experience along the supply chain and maximized by the marketing chain. The complexity of the transactions and the crescent number of customers define challenges for the grocery retail stores to process and provide a high-quality service based on data to their customers. The key to gaining competitive advantage is to understand, classify, and prevent customer churn to maximize profit. It is used to attract and retain new customers with data-driven decisions. For this, it is necessary to understand and label the customers as churners. The organizations tend to focus more on developing plans to deal with the Customers, using CRM (Customer Relationship Management) as the core strategy to handle, maintain and build new long-lasting relationships with the customer as a critical stakeholder (Chorianopoulos, 2015). Data mining techniques help CRM to achieve their goals building tools that lead to informed decisions, creating better, stronger and long-lasting relationships thanks to the analysis of the customer-organization interaction and application of complex models

A framework for the dynamic management of Peer-to-Peer overlays

Peer-to-Peer (P2P) applications have been associated with inefficient operation, interference with other network services and large operational costs for network providers. This thesis presents a framework which can help ISPs address these issues by means of intelligent management of peer behaviour. The proposed approach involves limited control of P2P overlays without interfering with the fundamental characteristics of peer autonomy and decentralised operation. At the core of the management framework lays the Active Virtual Peer (AVP). Essentially intelligent peers operated by the network providers, the AVPs interact with the overlay from within, minimising redundant or inefficient traffic, enhancing overlay stability and facilitating the efficient and balanced use of available peer and network resources. They offer an “insider‟s” view of the overlay and permit the management of P2P functions in a compatible and non-intrusive manner. AVPs can support multiple P2P protocols and coordinate to perform functions collectively. To account for the multi-faceted nature of P2P applications and allow the incorporation of modern techniques and protocols as they appear, the framework is based on a modular architecture. Core modules for overlay control and transit traffic minimisation are presented. Towards the latter, a number of suitable P2P content caching strategies are proposed. Using a purpose-built P2P network simulator and small-scale experiments, it is demonstrated that the introduction of AVPs inside the network can significantly reduce inter-AS traffic, minimise costly multi-hop flows, increase overlay stability and load-balancing and offer improved peer transfer performance