A Simple Model for the Effectiveness of Delaying Strategies for Telecommunications Churn Reduction

Churn represents a major source of concern for telecommunications operators. Since customer migration is somewhat supported in most regulated environments, deadlines are often set for the completion of porting operations, and sanctions are imposed in the case of violations. However, the donor operator may be led to adopt delaying strategies if the gain to be obtained exceeds the sanctions. A model isproposed to evaluate the effectiveness of such practices, relying on simple models for the customer lifetime value and for the customer behaviour. Closed form expressions are derived for the minimum sanction value effective to discourage the operator from introducing undue delays in porting operations. It is shown that, under the safest conditions forthe donor operator, this value needs not be larger than twice the net average revenue per user.