Statistical Methods in Customer Relationship Management

7.2 Customer win-back

Strauss and Friege [1] provided a conceptual framework for lost customers' regain management which consists of analysis, actions, and controlling. To determine which customers are worthy of regaining, these authors proposed the second lifetime value (SLTV). In the controlling process, they proposed to maximize the regain profit (RP) function

(7.1)

where is the number of lost customers attempted to regain for segment , is the regain ratio which is a function influenced by the regain cost, and , , and are various costs occurred for regaining lapsed customers.

Thomas et al. [2] investigated the best price strategy for reacquisition of lapsed customers. Different from the proportional hazards model, the proposed model used in Thomas et al. [2] is called ‘split hazard model.’ ...