The Impact of Customer Churn on Social Value Dynamics

Abstract

Modern telecommunication service providers implicitly create interactive social networks of individuals that both depend on and influence each other through complex social relationships grown on friendship, shared interests, locality, and so forth. While delivering services on the individual basis, the network effects exerted from customer-to-customer interactions remain virtually unexplored and unexploited. The focus of this article is on customer churn, where social network effects are widely ignored yet may play a vital role in revenue protection. The key assumption made is that a value loss of a churning customer extends beyond his revenue stream and directly affects interaction within local neighborhoods. The direction and strength of this impact are evaluated experimentally by direct measurements of the total neighborhood value of the churning customer along with other standard social network measures taken before and after the churn event.

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