A study of the relationships between service failures and customer churn in a telecommunications environment

Telecommunications companies are facing increasing customer service pressure as they launch the triple-play bundle of voice, video, and internet access services. Firms recognize that providing quality customer service in the highly competitive telecommunications industry is critical to their success and delivering poor customer experiences puts customer relationships and revenues at risk. One of the metrics used by telecommunications companies to determine their relationship with customers is ldquocustomer churnrdquo, the degree to which a telecommunication company´s customers cancel or disconnect their service. An assumption in the industry is that customer churn is directly related to customer satisfaction. The purpose of this research is to identify customers with service failures and determine the propensity for a customer to disconnect based upon the frequency of a recent service failure reported and the success of repair. The research shows that customers who subscribe for the triple-play of voice, video and internet access are more likely to cancel all services from their provider after a service failure than are other customers. The results of the research suggest a strategy for identifying customers in advance who are most likely to disconnect and developing a service request response plan to encourage them to remain loyal customers.