Can proactive customer retention efforts backfire?

I found this note on “When It Comes To Retaining Your Customers, Sometimes It’s Best To Leave Them Alone” very thought-provoking.  Please note particularly:

The research involved 65,000 customers of a South American wireless communications firm. Some of the participants were randomly selected to receive a recommendation for a plan that was predicted to save them money based on their past behavior and others did not receive the same encouragement. As a result, only 6% of the customers who were not offered a plan suggestion left the supplier within the first three months after the program was launched. However, 10% of those that were given a recommendation left the company high and dry.

Please also note a similar study on managing “walking dead” customers:

The walking dead are “customers who currently maintain service but whose next action will be to discontinue all services, an important economic consequence to the firm,” according to a new study that examines how the customers of a telecommunications firm acquire and discard services over time. Companies would be wise to identify their walking dead and not market additional services to them because there may be an unintended effect, the paper suggests.

In my view, in both cases, the best approach to proactively retaining these customers is not to leave them alone but instead to more effectively engage them earlier on in their lifecycle, well before they become “walking dead”.  More specifically, customer acquisition, customer onboarding, and customer development efforts should all be infused with proactive customer retention consideration.  Deferring proactive customer retention to the end of the lifecycle could often produce the surprisingly negative results that both studies are observing.

Please add your perspective in a comment below:

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About Arie Goldshlager

Customer Insight, Customer Strategy, and Innovation Consultant
This entry was posted in Customer Insight, Customer Loyalty, Customer Retention. Bookmark the permalink.

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