Factors that influence prepaid churn subscribers when choosing a mobile-service provider

Abstract

High prepaid subscriber churn impacts on the service provider's profitability, financial evaluation and resource utilisation. Simultaneously it deprives subscribers of improved service because service providers are committing resources to subscriber acquisition and the management of subscriber retention instead of committing these resources to improving the value propositions offered to subscribers. A prepaid churn rate of just less than 50% in South Africa (2009) highlights the need for research into the factors that influence churned prepaid subscribers' choice of mobile-service provider. This in turn will increase the knowledge of retention and acquisition of prepaid subscribers. Using a telephonic survey on a sample of 861 prepaid subscribers, quantitative research was conducted to determine those factors that churned prepaid subscribers consider important when choosing a mobile-service provider. By making use of Analysis of Variance 4 out of 11 factors that, prepaid subscribers considered very important were identified when choosing a mobile-service provider. These included, in order of importance, Customer service quality, Mobile tariffs, Prepaid airtime and Starter-pack availability and Promotions. Discriminant Analysis highlighted 9 factors to be used to predict and classify groups of subscribers based on average monthly spend. The discriminate equation coefficients highlighted how these two groups of subscribers view the 9 factors when choosing a mobile-service provider.