Mobile phone customer retention strategies and Chinese e-commerce

Using an extensive sample of 414,733 customers of three different calling plans of a mobile operator in China, we investigate the effectiveness of the company’s retention strategies by examining the effect of such strategies on extending the customer lifecycle. We find that the incremental average revenue per user (ARPU) in the retention period and the retention bonuses are positively correlated. The retention policies are also positively correlated with the increments of consumption variables (the number of calls, the number of short messages, and the value-added services). Moreover, the significant and positive interactions between the retention bonus and the consumption increments in one of the calling plans suggest, to a certain degree, that the consumption variables moderate the relationships between the bonuses and the relative ARPU. Finally, the retention strategies demonstrate different levels of effectiveness for three different calling plans. Based on the findings, we draw implications for the development of Chinese e-commerce.