The Role of Peer Influence in Churn in Wireless Networks

TL;DR

This study investigates how peer influence affects subscriber churn in wireless networks, highlighting the importance of considering social effects in retention strategies and the limitations of survival models in disentangling peer influence from homophily.

Contribution

The paper introduces a methodology combining survival models and generalized propensity scores to quantify peer influence on churn, revealing its significant role and the limitations of traditional models.

Findings

Peer influence increases churn propensity among friends.

Strong friends' churn has a greater impact on individual churn.

Survival models overestimate peer influence due to confounding factors.

Abstract

Subscriber churn remains a top challenge for wireless carriers. These carriers need to understand the determinants of churn to confidently apply effective retention strategies to ensure their profitability and growth. In this paper, we look at the effect of peer influence on churn and we try to disentangle it from other effects that drive simultaneous churn across friends but that do not relate to peer influence. We analyze a random sample of roughly 10 thousand subscribers from large dataset from a major wireless carrier over a period of 10 months. We apply survival models and generalized propensity score to identify the role of peer influence. We show that the propensity to churn increases when friends do and that it increases more when many strong friends churn. Therefore, our results suggest that churn managers should consider strategies aimed at preventing group churn. We also show that survival models fail to disentangle homophily from peer influence over-estimating the effect of peer influence.