Customer Retention

Front 1

what's the meaning of retention for products with short pruchase cyles?

Back 1

having customers continue to purchase the product or service over a specified period of time

Front 2

what's the meaning of retention for products with long purchase cycles?

Back 2

having customers hold the intention to purchase the product or service at the next purchase occasion

Front 3

why is retaining customers important?

Back 3

- customers are assets
- cost of new customers much higher than retaining existing
- there are other opportunities in the retained customer
- impact of CLV
- impact on market share
(share changes at higher rate as retention increases)

Front 4

what's the goal of retention?

Back 4

not to strive for zero defections but to optimize customer equity - firms shouldn't aim to keep all customers.

Front 5

what are the factors that affect churn?

Back 5

customer satisfaction

customer characteristics

marketing programs

competition

switching costs

Front 6

what are customer retention strategies?

Back 6

- improve quality
(prod / CS improvement)

- inducing customer commitment
(frequency loyalty programs, customization, community buuilding)

- acquistion-retention link
(acquiring right customers, not too high expectations, not too low acquistion pricing)

Front 7

what's an untargeted way of reducing churn?

Back 7

increasing CS or increaseing switching costs

Front 8

what's a targeted way of reducing churn?

Back 8

identifying who's most likely to churn and attempting to rescue that customer

Front 9

how to proactively target churners?

Back 9

- identify possible churners
- understand why they might churn
- design appropriate contact / offer strategy
- monitor and evaluate results

Front 10

what's the RS matrix?

Back 10

recency - tme since last purchase

sales rate - total time since first purchase / number of times purchased

decision heuristics - if not purchased within the predicted amout of time -> likely a defector