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The impact of personalised incentives on the profitability of customer retention campaigns

Version 2 2024-06-04, 04:10
Version 1 2017-03-15, 17:10
journal contribution
posted on 2024-06-04, 04:10 authored by Ali Tamaddoni JahromiAli Tamaddoni Jahromi, S Stakhovych, M Ewing
Traditional approaches to managing customer churn have typically concentrated on those customers most likely to defect. While accurately predicting customer churn probability is important, this metric alone does not sufficiently empower managers to make optimal decisions. Hence, the current study focuses on the relationship between retention incentives and profit maximisation. Specifically, we improve existing churn management practices by: (1) allowing for customer heterogeneity in incentive redemption behaviour, (2) introducing the dependence of the probability of accepting an incentive on its monetary value, and (3) offering an improved model for developing retention campaigns. We support our conclusions with empirical data and simulations and make tangible managerial recommendations.

History

Journal

Journal of marketing management

Volume

33

Pagination

327-347

Location

Abingdon, Eng.

ISSN

0267-257X

eISSN

1472-1376

Language

eng

Publication classification

C1 Refereed article in a scholarly journal, C Journal article

Copyright notice

2017, Westburn Publishers

Issue

5-6

Publisher

Taylor & Francis