Winter 2014
Article
Journal of Economics & Management Strategy

Does Service Bundling Reduce Churn?

Format:Print

Abstract

We examine whether bundling in telecommunications services reduces churn using a series of large, independent cross sections of household decisions. To identify the effect of bundling, we construct a pseudo-panel dataset and utilize a linear, dynamic panel-data model, supplemented by nearest-neighbor matching. We find bundling does reduce churn for all three "triple-play" services. The effect is only "visible" during times of turbulent demand. We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.

Keywords

Communication Technology; Customer Satisfaction; Product Marketing; Telecommunications Industry

Citation

Prince, Jeff, and Shane Greenstein. "Does Service Bundling Reduce Churn?" Journal of Economics & Management Strategy 23, no. 4 (Winter 2014): 839–875.