The Influence of Customer Churn and Acquisition on Value Dynamics of Social Neighbourhoods

The customers of modern telecommunication service providers implicitly create an interactive social networks of individuals, which both depend on and influence each other through various complex social relationships grown on friendship, shared interests, locality, etc. While delivering services on the individual basis, the social network effects exerted from customer-to-customer interactions remain virtually unexplored and unexploited. The focus of this paper is on customer churn and acquisition, where social neighbourhood effects are widely ignored yet may play a vital role in revenue protection. The key assumption made is that a value loss or gain of a churning or new customer extends beyond the revenue stream and directly affects interaction within local neighbourhoods. The direction and strength of this influence are evaluated experimentally by direct measurements of the total neighbourhood value of the churning customer taken before and after the churn event.