A churn-strategy alignment model for telecom industry

Abstract

Customer churn is a costly problem in the fiercely competitive telecom industry. The thesis research proposes and investigates a novel model, the Churn-Strategy Alignment Model (CSAM), for studying alignment relationships among customer churn predictors and the competitiveness strategies identified in a modified Delta model suitable for small and medium-sized (SME) telecom companies.

Exploratory factor analysis on a large data set sourced from a telecom company allowed for aggregating low-level churn predictors into business-level constructs. Managers could use knowledge around these identified business constructs to create more informed competitiveness strategies. Goodness-of-fit results from structured equation modeling did not support the CSAM model. However, middle-stage tests were informative. For example, the discriminant validity test shows that the constructs for product, customer solution, and customer profile in our modified Delta model are distinct. Further "quality", "standard usage", and "willingness to pay" are the important high-level factors of the strategies related to them respectively.