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Added for You - Recency for Customer Retention on Subscription Based Services
Customer service can be somewhat of a fine art at times. An unhappy customer can challenge business owners today on a multitude of levels. For many, the simple thought of dealing with an unhappy customer can make some business owners break out in a cold sweat.In 1999, Fred Reichheld (a US business guru) said, "It is not how satisfied you keep your customers, its how many satisfied customers you keep!"Words to live by. Its been estimated that it
For those of you who were born yesterday, John Wooden is the legendary former coach of the UCLA Bruins college basketball team. During a twelve season stretch between 1964 and 1975, Wooden’s teams were winners of a remarkable ten National Championships.Now, I don’t know John Wooden personally, and I’ve never been in business with him. But I know enough about the way that he coached the game of basketball to have a pretty good idea of the principles t
The generic technique of recency analysis, has to be adopted to the different context of every Business: unique Customer lifecycle, product type. In this article we examine the important case of subscription based (or continuity) services. Such services involve the continuous usage by a Customer, often based on a contract. Common examples are: bank accounts, credit cards, fixed & mobile telecommunication services. These services are offered in highly competitive markets, characterised by high customer switching (attrition or churn) rates, which erode the profitability of those who suffer it.
The selection of suitable measurements for recency is not obvious, in the case of continuity services. A bank account or a telephone subscription is potentially used every day, therefore ‘last time used’ cannot normally be the basis for a recency measurement. The fact that the service is used, does not reflect an active choice of the Customer to interact with the Business. Therefore one should try to identify those events which reflect ‘an active choice of the Customer to interact with the Business’. Moreover, these events should be divided into events reflecting a positive attitude of the Customer towards the business and a predisposition to strengthen the relationship with the Business (e.g. a service upgrade) and events
It never fails.The Ad Agency spends countless man-hours sweating over the fine details. Things that no one would ever notice are discussed, dissected, double-checked and then dutifully discarded for a "better" idea.Graphics are viewed upside-down and sideways. Letters are kerned in pixel widths. Font catalogues brimming with thousands of choices are scrutinized until the perfect one is found or the artist lapses into a coma.Finally,
The generic technique of recency analysis, has to be adopted to the different context of every Business: unique Customer lifecycle, product type. In this article we examine the important case of subscription based (or continuity) services. Such services involve the continuous usage by a Customer, often based on a contract. Common examples are: bank accounts, credit cards, fixed & mobile telecommunication services. These services are offered in highly competitive markets, characterised by high customer switching (attrition or churn) rates, which erode the profitability of those who suffer it.
The selection of suitable measurements for recency is not obvious, in the case of continuity services. A bank account or a telephone subscription is potentially used every day, therefore ‘last time used’ cannot normally be the basis for a recency measurement. The fact that the service is used, does not reflect an active choice of the Customer to interact with the Business. Therefore one should try to identify those events which reflect ‘an active choice of the Customer to interact with the Business’. Moreover, these events should be divided into events reflecting a positive attitude of the Customer towards the business and a predisposition to strengthen the relationship with the Business (e.g. a service upgrade) and event
A general counsel of a large international consulting firm told us about his experience talking to an interviewer who had called to discuss his satisfaction level with his outside law firm. He had been using the services of a “high end, expensive” law firm out of New York.We asked if the interview questions allowed him to speak about all the issues that were on his mind regarding his relationship with his lawyers. His response was, “There were ma
The selection of suitable measurements for recency is not obvious, in the case of continuity services. A bank account or a telephone subscription is potentially used every day, therefore ‘last time used’ cannot normally be the basis for a recency measurement. The fact that the service is used, does not reflect an active choice of the Customer to interact with the Business. Therefore one should try to identify those events which reflect ‘an active choice of the Customer to interact with the Business’. Moreover, these events should be divided into events reflecting a positive attitude of the Customer towards the business and a predisposition to strengthen the relationship with the Business (e.g. a service upgrade) and event
Network marketing is often tied to home based business ventures. Get rich quick. Find me two people and build an empire. Sounds familiar doesn't it. Well the internet and infomercials have hit the media with a big bang. You cannot surf the channels without seeing at least one new venture promising a yacht and full release from corporate America. So let's break it down to simple terms. A network is a group of things tied together in its simplest form. Phone li
The selection of suitable measurements for recency is not obvious, in the case of continuity services. A bank account or a telephone subscription is potentially used every day, therefore ‘last time used’ cannot normally be the basis for a recency measurement. The fact that the service is used, does not reflect an active choice of the Customer to interact with the Business. Therefore one should try to identify those events which reflect ‘an active choice of the Customer to interact with the Business’. Moreover, these events should be divided into events reflecting a positive attitude of the Customer towards the business and a predisposition to strengthen the relationship with the Business (e.g. a service upgrade) and event
Force can be defined as – coercion, pressure, to compel, to restrain, compulsory, obligatory, etc., etc. There are many managers, as well as organizations, who still rely on this unproductive approach to motivation and productivity. Management by coercion (force or fear) contributes to:· poor morale · high turnover · low productivity · poorly motivated employees · dissatisfied customers · vulnerability to competitors · po
Events signalling a positive attitude are:
• An order in general
• An additional order, building up a subscription portfolio (studies in the banking sector have shown that customers with a larger product portfolio, tend to be more loyal than those with a smaller one)
• A service upgrade (e.g. moving to a higher fixed monthly fee contract in mobile telephony)
• An order for a service enhancement, taking advantage of a service feature not used before
• Enrolment to the web channel, offered by the service
• The acceptance of a campaign offer
Events signalling a negative attitude are:
• A complaint
• A product cancellation, reducing the subscription portfolio size
• A subscription portfolio termination
These two event categories of ‘reduced’ and ‘increased’ Customer ‘friction’, should be considered separately, since they have opposite effect. They should not be used in the same metric, since they may be cancelling each other.
Moreover, the selection of the appropriate division of time into recency time periods, can affect the effectiveness of the prediction. These time periods relate to the Customer lifecycle of each product type.
Alternative recency metrics can be tested on their effectiveness, with a test campaign. The best measurement is the one that produces the best response rate predict
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