Churn Analysis
CELL2CELL: THE CHURN GAME
It was a cold and cloudy morning at Cell2Cell Headquarters as Sarah A. Stanford headed to her cubicle holding a cup of cappuccino in one hand and a bulky database manual in the other. Although a veteran in the database marketing field with a doctorate in Statistics, her new assignment was more challenging than she had imagined. Churn Management in the wireless industry was really complicated, but Sarah was excited to be working on perhaps the most important marketing issue facing Cell2Cell, one of the leading providers of cellular telephone service.
Sarah’s mission, as described by her boss, Charles R. Morris, was to (1) develop a statistical model for predicting customer churn, (2) use the model to identify the most important drivers of churn, and (3) with these new insights, recommend a customer churn management program to the CBM (Customer Base
Management) Group.
Sarah always felt comfortable dealing with data crunching, so she wasn’t afraid of the first two tasks. But the third task, developing the churn management program, was a different story. This would require her to combine her analytical and creative skills to devise a churn management program that would reduce the number of customer defections.
INDUSTRY BACKGROUND1
The cellular telephone industry has always offered a compelling value proposition: convenient, mobile telephone service. The industry started inauspiciously in 1921 when the Detroit, Michigan Police
Department first used a mobile radio in a vehicle. This system, as well as the others that followed, suffered from the same problem – lack of bandwidth. This meant that the radio frequency at which these telephones communicated could only support a limited number of telephones. In order for mobile telephone service to become a consumer product, this 1st generation or “analog era” needed a technological breakthrough.
That breakthrough came in 1983 with the first United States application of
It was a cold and cloudy morning at Cell2Cell Headquarters as Sarah A. Stanford headed to her cubicle holding a cup of cappuccino in one hand and a bulky database manual in the other. Although a veteran in the database marketing field with a doctorate in Statistics, her new assignment was more challenging than she had imagined. Churn Management in the wireless industry was really complicated, but Sarah was excited to be working on perhaps the most important marketing issue facing Cell2Cell, one of the leading providers of cellular telephone service.
Sarah’s mission, as described by her boss, Charles R. Morris, was to (1) develop a statistical model for predicting customer churn, (2) use the model to identify the most important drivers of churn, and (3) with these new insights, recommend a customer churn management program to the CBM (Customer Base
Management) Group.
Sarah always felt comfortable dealing with data crunching, so she wasn’t afraid of the first two tasks. But the third task, developing the churn management program, was a different story. This would require her to combine her analytical and creative skills to devise a churn management program that would reduce the number of customer defections.
INDUSTRY BACKGROUND1
The cellular telephone industry has always offered a compelling value proposition: convenient, mobile telephone service. The industry started inauspiciously in 1921 when the Detroit, Michigan Police
Department first used a mobile radio in a vehicle. This system, as well as the others that followed, suffered from the same problem – lack of bandwidth. This meant that the radio frequency at which these telephones communicated could only support a limited number of telephones. In order for mobile telephone service to become a consumer product, this 1st generation or “analog era” needed a technological breakthrough.
That breakthrough came in 1983 with the first United States application of
References: (1) Industry Survey – Telecommunications : Wireless – Standard & Poor’s – November 1, 2001 (2) 3G Market Evolution Primer – Sapan A