Yes, a rare 5 star article, my “must read”. Why? For one thing, it is based on analysis and real-life data modeling by Professor Peter Fader and friends at the Wharton School – it’s not a trade mag article by some Consultainer. Fader has a major track record in customer analysis and modeling. The article is Beware the Walking Dead.
What we’re talking about here is the effectiveness of cross-sell and retention efforts based on the Customer LifeCycle, and how if you execute too late in the Cycle, you could end up “waking the dead” and driving defection rather than encouraging retention. The specific example given is cable television, though this article provides support for a lot of ground covered on this blog and others, including my piece on engagement, and Ron’s numerous pieces on customer experience. I love it when academia synchs up with real world experience - academics are so much more rigorous, you know…
The article is a summary of the results from the academic paper, and includes a link to the actual paper for those of you who are into the math and modeling. If you’re unfamiliar with academic papers, they typically provide the actual formulas for the proof of the assertion. Reading the actual paper is not for the faint of heart, but I know some of you folks dig the high level modeling math. Not into the math? Read the article itself, an excellent summary.
Bottom line: another reason to downplay the LifeTime Value approach in favor of Customer LifeCycles.
They should’ve called it “Let Sleeping Dogs Lie”
I think I see similar behavior with my Scuba diving education business: inactive divers (no classes in 9+ months) take the final step of unsubscribing from my e-newsletter.
Of course, it’s a catch-22: if I don’t do something (eg remind them that they are divers and that there is a lot more to learn), they’re not going to take another scuba diving course; if I send them the newsletter and they unsubscribe, they won’t take another scuba course.
Of course, at 9+ months without a class, they are falling into the “not a customer” category.
PS: the RF ranking methods in “Drilling Down” work pretty well for Scuba education courses. Admittedly, I’m using a failry small data set, but the high RF scores for classes, dives and contact (newsletter) are very indicative of future behavior.
Thanks for the comment John. I think you’re right, and you might as well pick up who you can (if any) out on the 9+ month tail, because those that unsub are likely not ever to become customers again anyway…
Glad to hear the RF score is working for ya! For classes – especially high effort ones like scuba – I picture “momentum” being a big part of continuing on. You have to keep them engaged or it becomes easier and easier for them to think about giving it up…fitness classes, running groups, etc. all show this kind of behavior. And short of RF scores, I think people pretty much “predict” the behavior themselves from experience, you know:
“Where’s Sally? She hasn’t been to running group in weeks” and then everybody figures she probably won’t be back. And then they are right.
RF scores just take this same idea people “feel” based on experience and quantify it so you can organize yourself and do something about it.
Thanks again for the input!