Regaining drifting mobile communication customers: Predicting the odds of success of winback efforts with competing risks regression

Abstract

Mobile network operators (MNOs) make considerable efforts to reduce customer defection (= churn) by trying to motivate customers who announced to cancel their contract at the next legally possible date to withdraw their notification and to sign another postpaid contract or at least to accept a prepaid offer in case that they are unwilling to completely revoke their cancellation. Nevertheless, empirical evidence on factors significantly associated with the odds of success of an MNO’s reactive winback attempt is scarce. As a consequence, this study explores the capability of socio-demographic, contract and service usage characteristics of MNO subscribers as well as their stated primary reason for contract termination to predict the likelihood of a fully successful winback at the individual customer level. In a sample of 305,466 postpaid residential customers of the German subsidiary of a multinational MNO, competing risks regression analysis suggests that younger customers with above average service usage levels who were already in a tariff plan bundling mobile voice and Internet access services, yet had received a subsidized device from their current provider in the past, had not originally signed their contract in the firm’s own outlets and stated they cancelled their contract as a precautionary move or due to tariff level/structure reasons exhibit the highest prospects of full restoration. Moreover, the analysis reveals that the covariates studied and the competing risks regression technique achieve a satisfactory performance in predicting the outcome of the MNO’s customer winback efforts. Results are discussed in terms of basic entry points of MNOs for improving both their reactive winback as well as their new customer acquisition strategies.