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The impact of personalised incentives on the profitability of customer retention campaigns
journal contribution
posted on 2017-01-01, 00:00 authored by Ali Tamaddoni JahromiAli Tamaddoni Jahromi, S Stakhovych, Mike EwingTraditional 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 managementVolume
33Issue
5-6Pagination
327 - 347Publisher
Taylor & FrancisLocation
Abingdon, Eng.Publisher DOI
ISSN
0267-257XeISSN
1472-1376Language
engPublication classification
C1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2017, Westburn PublishersUsage metrics
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