Butterfly Effect in Social Network: Analysis of Churn Under Network Influence

Abstract

The extent of network effect has always been in the top five questions of marketers, yet emerging online social networks facilitated the empirical analysis of social networks for marketers. Although online social networks are cent source of network effect analysis, yet due to the lack of sales data the social network effect on sales is still in top ten questions of social network marketers. On the other hand, telecommunication network is grandiose source of social network information due to its neat network structure design, even though it has not been extensively analysed for social network, and network effects. What discriminates telecommunication network from other social network is that it is source of sales data as well. In this paper we will analyze network effect on churn in telecommunication network. We found out that under asymmetric social network market structure, number of calls received from churn customer, network degree of people a customer is contact with play signficant role in consumer probability of churn. We exerted hazard model of left censoring to achieve the result. Our findings have interesting implication for managers of social networks, making them cognizant of butter y effect of unprofitable customers instigating bullwhip effect of high user customer hazard. Based on our study, we can recommend managers to be attentive about unprofitable customers who call high user customers, incentivise them to reduce the churn probability of high value customers, resulting in reduction of churn of all the network base.