Category Archives: Analytical Culture

Customer Retention in a High Churn Business Model

Analytical Culture, Customer Experience, DataBase Marketing, Driller Q & A, Marketing thru Operations, Measuring Engagement

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)

Topic Overview

Hi again folks, Jim Novo here.

Yea, sometimes customer retention is a very tough gig; some businesses are simply not likely to encourage repeat purchase. But you can still try, right? Or perhaps focus your efforts on where the real power to affect customer value is for this type of business – acquisition and onboarding.

Let’s Drill Down …

Q:  I bought your book a few months ago and I thought it was great.

A:  Thanks for your support and kind words!

Q:  I did what I could using your book, but my mind is going in circles and I need help. Unfortunately I can’t pay big bucks and am hoping that the “case” will be of enough interest to allow you to help me out at less than you could charge to bigger companies.

A:  Perhaps! For example, I am always open to interesting projects if I can use them to publish a case study (names changed to protect the innocent)… most large companies do not want customer retention data revealed and it is tough to get case studies out there…

Q:  What I do: My company sells prepaid calling cards on the web.  I have been working at the company for 2 years and 4 months now.  Consumers purchase the service to place international calls at reduced rates from their landlines and cell phones.  They have no obligation to re-purchase.  They can buy any increment between $10 to $100 at a time. They can recharge their accounts at any time.

A:  Yes…

Q:  What I’ve found so far:

They seem fall into two main groups ­ those that buy only once, and those that buy more than once, but then each of these sub-groups has lots of sub-segments and it is confusing.  Some last a week, others last 2.4 years.

A:  This is typical…

Q:  My goals: 

Continue reading Customer Retention in a High Churn Business Model →

How Long is a Customer LifeTime?

Analytical Culture, DataBase Marketing, Driller Q & A, Marketing Research, Marketing thru Operations, Measuring Engagement, ,

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)

Topic Overview

Hi again folks, Jim Novo here.

There’s always two questions about the topic of Lifetime Value – how do you quanitify value, and how long is / how do you measure / decide what a Lifetime is? For now we’ll leave the value question unanswered, because a lot of that depends on company culture and what question you are trying to answer. Plus, it depends on how you measuree a Lifetime.

So let’s do the Lifetime thing first, shall we? To the Drillin’…

Q:  First of all thanks for an excellent web site – I often visit it to learn and / or get inspiration in my work.

A:  Thanks for the kind words!

Q:  Anyway, I work in a telco retention department and I’m trying to calculate a true and fair value for customer life time answering the question : “How long do we on average have a customer?”.

A:  A both noble and useful pursuit!

Q:  I have data on when customers signed up and when they left (or of course whether they are still here). My first problem is whether to include both lost and existing customers in the calculation.  If you only include the customers you lost you are only able to answer the question for those.  If you include existing customers you don’t know what life time to use for them.

A:  Well, yes, that’s correct.  But you’re really trying to accomplish several things at the same time, so you can break the analysis into different parts and then apply some business logic to get your answers. 

Continue reading How Long is a Customer LifeTime? →

When Acquisition Spoils Retention

Analytical Culture, Analytics Education, DataBase Marketing, Driller Q & A, Marketing thru Operations, Measuring Engagement,

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)

Topic Overview

Hi again folks, Jim Novo here.

OK, here’s a bit of a tough one – what if while investigating customer retention problems you find out that customer defection is highly correlated to specific salespeople or marketing programs? What if I told you this correlation is pretty common – but unrecognized, because hardly anybody goes looking for it? And if found, find trouble doing something about it?

Two issues – you can try to predict / save a customer in the process of defecting, and / or you can hunt down / fix the source of the defection – why is it happening in the first place?

Welcome to the politics of customer retention – and make sure to put your Drillin’ shoes on …

Please note: XXX is a major cell phone provider…

Q:  I’m an XXX customer – I saw an ad for a new phone I wanted for $230.  I went in to the XXX store and asked for the phone – the clerk rang it up at $580!! I showed him the ad.  He said that price is for new customers and he could not give it to me at that price.  So it made me feel that XXX did not value my business.  I then cancelled with XXX service and have told about 10 people about this situation.

A:  Right, this is a pretty common problem with companies that don’t understand
customer retention.  They’re so focused on acquisition that they cause defection and that’s where a lot of the churn in that particular business comes from.  I’d chalk it up to totally clueless marketing management.  

The irony of this situation:  XXX used to be one of the “gold standard” 1-to-1 marketers in the good ‘ol days.

In the first place, companies should not “broadcast” these kinds of offers, because you understand the impact, the leverage, the “costs 5x as much to acquire a customer as retain one” and so forth. If you want to make offers like that, you try to use discrete channels – direct mail and so on, as opposed to newspapers or radio / TV. The strategic issue is people are defecting at such a high rate the company thinks they need to really drive acquisition to make up for it instead of concentrating on retention, which would be less costly and more profitable overall. But even worse, these aggressive acquisition programs are actually increasing the likelihood of customer defection!

Continue reading When Acquisition Spoils Retention →