Who is (not) convinced to withdraw a contract termination announcement? – A discriminant analysis of mobile communications customers in Germany

Abstract

Convincing subscribers of mobile network operators (MNOs), who announce to terminate their contract at the next legally possible occasion to revoke their notice, is a challenge in the maturing MNO service industry. Using data for 607,948 postpaid customers of the German subsidiary of a multinational MNO, this study explores differences in contract-related, socio-demographic and service use behavior characteristics as well as in the stated primary cancellation reason between three subscriber groups: (1) customers withdrawing their termination and accepting a follow-up contract (full restoration group; n=276,488); (2) customers not revoking the cancellation of their postpaid contract, but accepting a prepaid offer of their MNO (partial restoration group; n=40,500); (3) churning customers sticking to their cancellation (loss group; n=290,960). The data reveal that compared to defecting customers, subscribers in the full restoration group were more likely (a) to try to cancel their agreement as a precautionary measure, (b) to be already in a tariff bundling mobile Internet and voice calling service provisioning, (c) to have a shorter overall length of contract relationship with their MNO and (d) to generate higher monthly revenues. Lost subscribers were much less inclined to name any reason at all for their defection notice than the two remaining groups. The share of subjects stating that a mismatch between their personal communication needs and their postpaid arrangement was the main driver to quit, was significantly higher in the partially restored group than in the rest of the sample. Overall, the characteristics of partially restored accounts were more similar to lost than to fully restored subscribers. Implications of the findings are discussed for regulators and customer restoration efforts of MNOs.