Statistical Methods in Customer Relationship Management

2.5 The Benefits of Customer Win-back

No matter what the efforts, firms must recognize that 100% customer retention is impossible. There are factors that are simply out of a firm's control that can affect a customer and influence him/her to leave. However, customer win-back has proven to be a valuable channel through which firms can regain and even improve on previous customer profitability. Strauss and Friege define customer win-back as ‘Rebuilding the relationship with customers who explicitly quit the business relationship’ [14]. BellSouth offers a great example of successful customer win-back. When it was losing around 21 000 small-business lines per month during 2001, it implemented customer win-back strategies and managed to regain 26 000 customers per month in 2003. Bellsouth based this successful customer win-back strategy on package and price bundling offers to customers. This strategy gave customers the ability to customize their package by adding desired options (e.g., long-distance calling) and immediately obtain the lowest possible bundle price for that combination of services. As CEO Duane Ackerman noted, ‘the extended customer life more than offsets bundle discounts’ [15]. In order for firms to achieve similar success to that of BellSouth, it is important to go through several steps in the customer win-back process. First, the firm must identify which customers have defected, and who among them can still be won over. Second, it is important for the firm to identify ...