Author(s)

Z. Mohammed, J. S. Maritz & D. Kotze

Abstract

In today’s subscription-based industries of which telecommunication businesses, Internet services, medical aid, and the insurance industry are examples, management activities should be customer-centred and performance should be measured based on the firm’s customer value. In this study we investigate customer survival time in the Internet service providers industry. From the database of an Internet service provider, a random sample of 30 000 customers was selected. Factors potentially associated with churn in the ISP industry are investigated in this study. There are mainly two groups: demographic variables (gender, age, language and number of children) and usage related variables (the IT background of the customer and customer segment). Factors are examined individually. Nonparametric survival analysis techniques are used to analyse the data. Demographics and usage related factors have shown potential in determining the survival time of the customer and the event of churn. In particular, age and number of children and the customer usage segment appeared to be extremely important. The customers with age less than 26 years have higher risk of churn, while customers who use Internet for business purposes appeared to be more loyal. A special retention strategy should be formulated for these groups. Keywords: subscription-based business, Internet service provider, customer survival time, churn, survival analysis, survival function, hazard function. 1 Introduction In today’s subscription-based industries of which telecommunication businesses, Internet services, medical aid, and the insurance industry are examples,

Keywords

subscription-based business, Internet service provider, customer survival time, churn, survival analysis, survival function, hazard function.