Forecasting voice and internet usage and Customer Lifetime Value for effective marketing for mobile service providers

The problem faced by mobile service providers in Zimbabwe is market uncertainty, increased competition and lagging broadband profitability. This study forecasts voice and internet usage and examines the use of Customer Lifetime Value (CLV) for effective marketing planning. Analysis was done in two parts: Forecasting voice and internet usage and modeling CLV. Voice and internet usage was forecasted using the ARIMA (p, d, q) model and CLV was modeled using Markov Chain Monte Carlo methods. Voice usage was found to be declining and internet usage increasing. However, the overall profitability of the two products combined is decreasing. The main components of CLV are investigated and these include: the retention rate, discount rate and profits. The significant factors driving CLV were found to be the service quality, time spent on network, customer service and the pricing. Improving on these factors would significantly improve on the CLV. Forecasting allows for long term planning and CLV captures the relationship between a customer’s preferences and the profit generated through customer satisfaction during the customers’ lifetime.