Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Study of Post-Churn Impacts on Brand Image in
Telecommunication Sector
Mustafid Aufar1
Managing churn is essential to the company. Much previous research has been done in this
area, but dimensions like upside perspective and post-churn have not been covered. In this
study, author intended to explore post-churn phenomena impacts on brand image in
telecommunication sector, so that companies can use the result to develop their brand
image attributes and have better competitive among others. Independent sample t test and
two related sample test were used to compare perceptions of non churner and churner
towards brand image. Significant differences are revealed in some brand attributes such as
connection, easiness, internet, coverage, and so on. It shows that some brands are on the
top of another
Keywords: Churn, Post-Churn, Brand Image, Upside Perspective, Brand Dynamic
1. Introduction
Businesses which apply subscribe policy to its customer should aware not only
convincing customers to sign contract but also retaining its existing clients. It needs a
lot of effort since many competitors give broad alternative choices for the customer.
Therefore, managing churn is essential to the company. Previous research has
addressed several impacts of these churn phenomena. Typically, churn has caused
negative and positive impacts to the company:


(1)Attracting new customer is difficult and expensive.(2)High expenses of
process which lead to service revoke.(3) Losing customer lead to income
reduction and negative effects on company reputations(Soeini, Reza
Allahyari; Rodpysh, Keyvan Vahidy, 2012)
Losing customer can be good if (1) the benefit for holding customer is less
than the cost; (2) when capability of company cannot match with the demand;
(3) churner tends to give feedback to the company
However, previous empirical research has focused primarily on the moment of
customer to churn and how it affects the company. Other dimensions like upside
perspective and post-churn have not been covered as variables that affect the
company too. The Upside perspective has been developed in finance, as „upside
risk‟ with the implications of „opportunities‟ to welcome consequences (Ward and
Chapman, 2002). Churn might cause some losses to the company but post-churn
can be an opportunity for the company to develop its brand image. In this paper,
author investigates the post-churn impacts on brand image within churner and
reveals the difference between churner and non churner toward brand image.
1
Mustafid Aufar, School of Business and Management, Bandung Institute of Technology, Email:
mustafid@sbm-itb.ac.id
1
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
2. Literature Review
a. Churn
„Churn' is a word derived from change and turn. It means the discontinuation of a
contract (Lazarov and Capota, 2007). Customer who decide to discontinue their
contract with the subscribe provider called as churner and customer who continue
called as non-churner. Mathematically, Churn rate can be calculated as (Jahanzeb
and Jabeen, 2007):
Monthly Churn = (C 0 + A 1 − C 1) / C 0
Where C 0, is the number of customers at the start of the month,
C 1, the number of customers at the end of the month,
and A 1, the gross new customers during the month.
Based on the nature, churn can be divided into External and Internal churn. External
churn is defined as the switching of customers from one service-providing company
to another while Internal churn is defined as the switching of customers from one
service to another within the same service provider company, for example, switching
from post- to pre-paid service within the same cellular service(Jahanzeb and Jabeen,
2007). Moreover, there are three types of churner (Lazarov and Capota, 2007):
1. Active/deliberate - the customer decides to quit his contract and to switch to
another provider.
2. Rotational / incidental - the customer quits contract without the aim of
switching to a competitor.
3. Passive / non-voluntary - the company discontinues the contract itself.
Based on the contract cancelled, churning can be divided into (Lazarov and Capota,
2007):
1. Total - the agreement is officially cancelled;
2. Hidden - the contract is not cancelled, but the customer is not actively using
the service since a long period of time;
3. Partial the agreement is not cancelled, but the customer is not using the
services to a full extent and is using only parts of it, and is instead using
constantly a service of a competitor.
To manage the level of churn rate, companies are developing sophisticated churn
management strategies. These strategies typically involve two steps – ranking
customers based on their estimated propensity to churn, and then offering retention
incentives to a subset of customers at the top of the churn ranking (Lemmens and
Gupta, 2013). Conventionally, data needed to discover the propensity to churn are
(Kusuma, Radosavljevik, Takes, Putten, 2013) demographic information (age,
gender or location), contractual details (e.g., Package plan type, contract duration or
price), usage facts (e.g., voice call duration, the frequency of sending extmessages), and service related information (e.g., number of interactions with
customer service or number of dropped calls). Then these data are process with
2
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
some tools such as Data Mining, Decision Tree C5.0, CART Decision Tree,
ADTress, K-mean, K-medoid, BIRCH, U-matrix, and so on. Not only aware of the
churn rate, company should aware of post churn impact too. Post churn is a
phenomena called as “after effect” of churn. Post churn rising from the information
transactional in the market, where customer, ex-customer, and non-customer
interact. The ex-customer probably will give positive or negative comments based on
his/her perceive quality. Consequently, this will affect the customer‟s mindset toward
brand image.
b. Brand Dynamic and Brand Image
Brand image is consumers‟ perceptions about a brand, as reflected by the brand
associations held in consumer memory. Although brand associations come in many
forms, it can be distinguished between product-related or performance-related
versus non-product-related or imagery-related attributes (Keller, 2013). One of the
ways is using brandy dynamic model, to determine the performance perceived
image. Author investigates 19 brand image attributes from service provider which are
adapted from Thamsaranasakul‟s thesis about factors that influence customer churn
in telecommunication industry in Bangkok (Thamsaranasakul, 2007):
Code
1
2
3
4
5
6
7
Table 1. Brand Image Attribute Code
Brand Image Attribute Code Brand Image Attribute Code
Connection
8 International Service
15
No Noise
9 Roaming
16
Price
10 Coverage
17
Failure
11 Payment Method
18
EASINESS
Internet
VAS
12
13
14
Promo
Event
Call Center
19
Brand Image Attribute
Complaint Service
Counter Service
Fairness
Brand
Terms
Millward Brown‟s Brand Dynamic model offers a graphical model to represent the
emotional and functional strength of relationship consumers have with a brand. The
five stages of the model, in ascending order of an increasingly intense relationship,
are presence, relevance, performance, advantage, and bonding. By comparing the
pattern across brands, we can uncover relative strengths and weaknesses and see
where brands can focus their efforts to improve their loyalty relationship (Keller,
2013).
3
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Figure 1Brand Dynamic Pyramid





Bonding - Rational and emotional attachments to the brand to the
exclusion of most other brands
Advantage - Felt to have an emotional or rational advantage over other
brands in the category
Performance - Felt to deliver acceptable product performance and is on
the consumer's short-list
Relevance - Relevant to consumer's needs, in the right price range or in
consideration set
Presence - Active familiarity based on past trial, saliency or knowledge of
brand promise
The correlation brand dynamic and churn is on the relationship strength. Customer
will not get into bonding stage if they did not have strong relationship with the brand.
Here some reasons why customer did not have strong relationship and decide to
discontinue their contract:
 Relevance
: Another brand offer more relevance product/services to the
customer needs.
 Performance : The product/service used by the customer cannot perform
well. There is presence of service gap.
 Advantage
: There is no advantage among other brands, low switching
cost.
This theory also can be used to analyze post-churn phenomena. In the market,
people have different stages and different brand, and they interact with each other.
These cross stages and cross brands will affect to determine who have stronger
arguments and at last determine who will be influenced. Finally, the impact will be
categorized as positive, negative, or neutral impact towards the brand image.
4
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
3. Methodology
Data were collected by using direct questionnaires asking about demography, brand
dynamic, and brand image attribute. Sampling method used for this research is
probability samples, which is simple random samples, as every sample of a fixed
size has the same chance of selection as every other sample of that size (Levine,
Krehbiel, and Berenson, 2010). To have reliable result, author use Slovin‟s theory
with margin error of 5% from 95% confidence level size of the research object. At the
end, sample size of 241 respondents was revealed, 58.51% female and 41.49%
male. Their age profile ranges from 18 to 22 years, with occupation as student in
School of Business and Management, Bandung Institute of Technology. They are
mostly churner (83.40%) with 45 different churn variations within 11 service provider.
The service providers are Simpati, Axis, XL, IM3, Mentari, AS, Three, Fren, Esia,
and Flexi. Data were analyzed using SPSS 21, with three tools, which are
Frequencies analysis, independent samples t test, and two related samples test.
a. Frequencies Analysis:
Frequencies analysis reveals the numbers/frequencies in percentage of a variable in
categorical data. Author use this analysis to see the total respondent‟s profile such
as gender, age, income, and expense in form of percentage.
b. Independent-Samples T Test:
Independent sample t test use to test the significant mean differences between two
groups. Author use this analysis to reveal mean differences between churner and
non churner toward brand image. Data were selected with cases of same brand
within churner and non churner, and then compared mean of 19 brand image
attributes within two groups. If the calculated value of sig. (2-tailed) < α, then there
is significant difference.
c. Related Sample Test
Two related sample test similar with paired sample t test. However, related sample
test can be use for nominal and ordinal data. There are three types of two related
sample test: Wilcoxon, Sign, and McNemar. Author use Wilcoxon to reveal
differences of brand image between the brand before churn and the brand after
churn. The 45 different churn variations were analyzed, and then compared to see if
there were any positives, negatives, or ties difference within the two brands. The
difference is significant if asymp. sig. (2-tailed) < α.
5
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
4. Findings
a. Churn Profile
Table 2. Subscribed brands before churn
Cumulative
f
%
Percent
Valid Simpati
66 27.4
27.4
Axis
21
8.7
36.1
XL
46 19.1
55.2
IM3
67 27.8
83.0
Mentari
4
1.7
84.6
Halo
4
1.7
86.3
AS
12
5.0
91.3
Three
11
4.6
95.9
Fren
4
1.7
97.5
Esia
1
.4
97.9
Flexi
5
2.1
100.0
Total
241 100.0
Table 3. Subscribed brands after churn
Cumulative
f
%
Percent
Valid Simpati
96 39.8
39.8
Axis
3
1.2
41.1
XL
61 25.3
66.4
IM3
36 14.9
81.3
Mentari
4
1.7
83.0
Halo
15
6.2
89.2
AS
8
3.3
92.5
Three
13
5.4
97.9
Fren
4
1.7
99.6
Esia
1
.4
100.0
Flexi
0
0.0
100.0
Total
241 100.0
From tables above, there are changes in the respondent‟s subscribed brands before
and after churn. SIMPATI and XL have an increasing on its total customer by
45.45% and 32.6% respectively. On the other hand, IM3 and AXIS have major loss
in its total customer. Respectively, they loss 46.26% and 85.71% t their total
customer. Only Mentari have maintained its total customer. To have deeply
understanding about the increasing/decreasing total customer of each brand, author
analyzed non churner which is an important factor to maintain its total customer.
Below are the data:
Brands of
Non
Churner
Total
Table 4. Cross tab. Brand of non churner – Brand dynamic
Brand Dynamic Stages
Non
Relevance Relevance Performance Advantage Total
Simpati
0
5
2
14
21
XL
1
0
1
6
8
IM3
0
2
1
3
6
Halo
1
1
0
2
4
AS
0
0
1
0
1
2
8
5
25
40
Non
Churn
Rate
31.81%
17.39%
8.95%
100%
8.33%
16.59%
From table above, It is revealed that non churner have achieved highest stage in
brand dynamic stage, which is advantage stage. It shows that the higher stage in
brand dynamic stage will affect people stay/loyal to their subscribed brand. 6 out of
11 service providers cannot keep their customer loyal. There are only 40 people
(16.59% of total respondent) loyal to their brands. HALO must have maintained good
service as it have 100% non churn rate. SIMPATI and XL have 31.81% and 17.39%
rate respectively, which impact to their total customer after churn. It reveals that
6
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
MENTARI‟s total customer were not from its loyal customer, but from the new one.
To help the understanding author investigated churn variations. Below is the table of
churn variations:
Brands
Churn
from
Total
Table 5. Cross tab. Brands churn from – Brands churn to
Brands Churn to
Simpati Axis XL IM3 Mentari Halo AS Three Fren Esia Total
Simpati
0
1 19 14
3
4
1
3
0
0
45
Axis
7
0
5
3
0
0
2
2
1
1
21
XL
20
1
0
8
0
2
2
3
2
0
38
IM3
31
0 22
0
0
3
1
4
0
0
61
Mentari
2
0
0
2
0
0
0
0
0
0
4
AS
2
0
4
1
1
2
0
1
0
0
11
Three
6
1
2
1
0
0
1
0
0
0
11
Fren
3
0
0
1
0
0
0
0
0
0
4
Esia
1
0
0
0
0
0
0
0
0
0
1
Flexi
3
0
1
0
0
0
0
0
1
0
5
75
3 53 30
4
11
7
13
4
1 201
From table above, there are 45 churn variations. In General, most of respondents
move to SIMPATI. SIMPATI loss its 45 customers, who mostly move to XL and IM3,
while gaining 75 new customers majorly from XL and IM3. Another brand who has
an increasing is HALO. HALO has kept its entire customer loyal, and gain 11 new
customers from SIMPATI, XL, IM3, and AS. Instead of increasing in its total
customer, MENTARI keep maintaining its market share in the same level by gaining
new customer from SIMPATI and IM3. On the other hand, a decreasing in total
customer of IM3 was revealed as mostly its customer move to SIMPATI and XL.
b. Churner and Non Churner Mean Difference Towards Brand
Image Attribute
Author investigates if post churn phenomena impacts brand image between non
churner and churner. Below is the result of mean differences towards brand image
attribute:
Table 6. Brand Image Comparison of Non churner and Churner within one brand
Comparison between
Non
churner
Churner
Brand Attributes Sig. (2-Tailed) Value
1
2
3
4
5
6
7
8
9
10
Churn from SIMPATI
0.189
0.113
0.093
0.245
0.010
0.025
0.702
0.389
0.928
0.180
Churn to SIMPATI
0.132
0.778
0.481
0.491
0.602
0.446
0.084
0.523
0.333
0.388
0.02
0.369
0.469
0.019
0.006
0.036
0.494
0
0.008
0.16
Churn to XL
0.715
0.513
0.904
0.814
0.414
0.925
0.96
0.03
0.226
0.195
Churn from IM3
0.045
0.135
0.071
0.986
0.413
0.003
0.371
0.05
0.006
0.025
Churn to IM3
0.882
0.68
0.288
0.066
0.537
0.244
0.494
0.776
0.264
0.717
0.251
0.714
0.6
Simpati
Churn from XL
XL
IM3
Churn from HALO
There is no churner from HALO
HALO
Churn to HALO
0.176
0.334
0.617
0.65
0.15
0.902
0.969
7
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Table 7. Brand Image Comparison of Non churner and Churner within one brand (CONTINUE)
Brand attribute Sig. (2-Tailed) Value (CONT.)
Comparison between
Non churner
Churner
11
12
13
14
15
16
17
18
19
Churn from SIMPATI
0.110
0.423
0.409
0.066
0.135
0.570
0.713
0.619
0.553
Churn to SIMPATI
0.360
0.718
0.960
0.937
0.875
0.380
0.064
0.027
0.993
Churn from XL
0.029
0.008
0.048
0.249
0.362
0.032
0.106
0.053
0.014
0.42
0.223
0.148
0.974
0.54
0.308
0.512
0.316
0.876
Churn from IM3
0.695
0.046
0.869
0.063
0.601
0.688
0.031
0.046
0.376
Churn to IM3
0.931
0.607
0.268
0.68
0.024
0.353
0.776
0.626
0.562
0.161
0.901
0.431
Simpati
XL
Churn to XL
IM3
Churn from HALO
There is no churner from HALO
HALO
Churn to HALO
0.588
0.095
0.285
0
0.08
0
As non churner respondents are limited, only SIMPATI, XL, IM3, HALO, and AS
brand image can be analyzed. Table above shows that there is significant difference
of SIMPATI, XL, IM3, and HALO‟s brand image, while AS have no significant
difference after being analyzed. First, SIMPATI brand image of easiness have
significant difference between churner from SIMPATI and its non churner. Second,
XL brand image of connection, failures, easiness, international service, roaming, and
terms have significant difference between churner from XL and its non churner.
Third, IM3 brand image of internet and roaming have significant difference between
churner from IM3 and its non churner. Moreover, IM3 brand image of complaint
service have significant difference between churner to XL and its non churner.
Finally, HALO brand image of complaint service and counter service have significant
difference between churner to HALO and its non churner. The mean difference
between churner from HALO and non churner HALO cannot be calculated as there
is no respondent who churn from HALO.
c. Brand Image Comparison of Service Provider Within Churner
Author investigates if post-churn phenomena impacts brand images among service
provider within churner. Below is the result of mean differences towards brand image
attributes among service providers:
Table 8. Brand Image Comparison Within Churner
Comparison between
Churn From
Churn to
SIMPATI
Brand Attribute Sig. (2-Tailed) Value
1
2
3
4
5
6
7
8
9
10
XL
0.759
0.748
0.305
0.903
0.073
0.058
0.154
0.4
0.916
0.805
SIMPATI
IM3
0.862
0.38
0.014
0.317
0.021
0.713
0.454
1
0.366
0.589
AXIS
SIMPATI
0.026
0.083
0.257
0.02
0.039
0.026
0.039
0.059
0.041
0.026
XL
SIMPATI
0.001
0.059
0.923
0.121
0.015
0.008
0.222
0.011
0.031
0.015
IM3
SIMPATI
0
0
0.273
0
0
0
0.12
0.001
0.001
0
8
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Table 9. Brand Image Comparison Within Churner (CONTINUE)
Comparison between
Churn From
Churn to
Brand Attribute Sig. (2-Tailed) Value (CONT.)
11
12
13
14
15
16
17
18
19
SIMPATI
XL
0.129
0.006
0.008
0.057
0.07
0.118
0.132
0.265
0.052
SIMPATI
IM3
0.48
0.062
0.366
0.021
0.206
0.942
0.084
0.417
0.248
AXIS
SIMPATI
0.026
0.414
1
0.157
0.109
0.059
0.083
0.102
0.083
XL
SIMPATI
0.002
0.012
0.012
0.006
0.059
0.023
0.372
0.001
0.032
IM3
SIMPATI
0.052
0.288
0.073
0.002
0.008
0.027
0.011
0
0.008
First, there is significant difference in brand image attribute of Promo and Event
between SIMPATI and XL, as 11 out of 19 respondents think brand image of XL
promo better than SIMPATI and 10 out of 19 respondents think brand image of XL
event better than SIMPATI. Second, there is significant difference in brand image
attribute of price, easiness, and call center between SIMPATI and IM3, as 10 out of
14 respondents, 8 out of 14 respondents, and 8 out of 14 respondents respectively
think brand image attribute of price, easiness, and call center IM3 better than
SIMPATI. Third, there is significant difference in brand image attribute of failures
between AXIS and SIMPATI, as 6 out of 7 respondents think SIMPATI is better than
AXIS. Forth, brand attribute of connection, easiness, internet, international service,
coverage, payment method, promo, event, call center, counter service, and brand
between XL and SIMPATI show significant difference, respondents think SIMPATI
have better brand image in those attributes. Finally, IM3 and SIMPATI have
significant difference in brand image attribute of connection, noise, failure, easiness,
internet, international service, roaming, coverage, call center, complaint service,
fairness, brand, and terms. Respondents think SIMPATI have better brand image in
those attribute compare to IM3.
5. Conclusion
In this present research, Author has analyzed both perception from non churner and
churner, then compare their perception towards brand image attributes. Significant
differences are revealed in some brand attributes such as connection, easiness,
internet, coverage, and so on. It shows that some brands are on the top of another.
This result can be used by the service providers to develop their brand image
attributes and have better competitive among others.
6. References
a. Articles
Jahanzeb and Jabeen. 2007. "Churn management in the telecom industry of
Pakistan: A comparative study of Ufone and Telenor, Marketing & Customer
Strategy Management", pp. 120-128.
Kusuma, Radosavljevik, Takes, Putten. (2013). "Combining Customer Attribute and
Social Network for Prepaid Mobile Churn Prediction, BENELEARN", pp. 9.
9
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Lazarov and Capota. 2007. Business Analytics Course. Churn Prediction , 1-5.
Lemmens and Gupta. 2013, September. Managing Churn to Maximize Profit. 38.
Soeini, Reza Allahyari; Rodpysh, Keyvan Vahidy. 2012. "Applying Data Mining to
Insurance Customer Churn Management, IACSIT Hong Kong Conference", pp.
82-92. Singapore: IPCSIT.
Thamsaranasakul, N. 2007. Factors that influence customer
telecommunication industry in Bangkok. Shinawatra University.
churn
in
Ward and Chapman. 2002. "Transforming project risk management into project,
International Journal of Project Management", 9.
b. Books
Keller, K. L.2013, Strategic Brand Management. Hanover: PEARSON.
Levine, et al.2010, Business Statistic. PEARSON.
10