While database marketing activities such as cross-selling, upselling, frequency reward, and customer tier programs focus on developing the customer, there is always the fear that in the midst of these efforts, the customer will decide to leave the company, i.e., “churn.” We discuss the approaches that can be used to control customer churn, focusing on proactive churn management, where the customer is contacted ahead of when he or she is predicted to churn, and provided a service or incentive designed to prevent the customer from churning. We review predictive modeling of customer churn, and present a framework for developing a proactive churn management program.
KeywordsCustomer Satisfaction Predictive Accuracy False Alarm Rate Credit Card Switching Cost
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