Financial implications of rate plan optimization in the post-paid mobile market

In the competitive mobile telecommunications market, rate plans with new pricing structure are introduced regularly. Prior literature reveals that subscribers often overpay for their service because of inappropriate rate plan selection. Having subscribers on financially-optimal rate plans is found to be beneficial from both churn reduction and tenure maximization perspectives. However, the revenue implications of deploying such a customer relationship management strategy have not been thoroughly researched. This paper examines the revenue implications by analysing 1249 post-paid mobile subscribers in Canada over a 44-month period. This research also provides insights into some potential moderators that may influence the strengths of the linkage between rate plan suitability and revenue contribution.