Predictive Marketing

Chapter 13Play Nine: Launch Predictive Programs to Retain More Customers

In this chapter, we will look closer at the definition of loyalty and churn, and cover specific customer retention strategies including customer appreciation campaigns, proactive and reactive churn management, and customer reactivation campaigns.

Understanding Your Retention Rate

The retention rate of your customers is defined as the percentage of customers that you retain during the measurement period. There are at least two ways to measure retention: you can focus on the percentage of customers you retain or on the percentage of dollars you retain. We recommend you focus on dollar value retention. This overcomes the challenge of having great retention metrics at a customer count level and still having an unhealthy business. The way you do this is by understanding the retention rate of your customers by value segment they belong to, as described in Chapter 8.

The Concept of Negative Churn

Negative churn is the concept of growing revenue from existing customers at a rate faster than the rate at which other customers stop buying your products or services.

When customers stop buying your products and can no longer be counted as customers, it's easy to think that the lost revenue will have to be replaced with sales from new customers and just focus on acquiring new customers. However, that approach doesn't take the whole picture into account. What you should really be looking at is the total value of all ...