Between death and life - a formal decision model to decide on customer recovery investments

As digitization supports customers in gaining increased market transparency (Desai Hastings Law Journal, 65 (6), 1469–1482, 2014 ), migrating from one organization to another (“customer migration”) is becoming easier and more attractive. Thus, taking measures to regain customers who terminated their...

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Bibliographic Details
Published in:Electronic markets 2018-11, Vol.28 (4), p.423-435
Main Authors: Kleindienst, Dominikus, Waldmann, Daniela
Format: Article
Language:English
Subjects:
Business and Management
Customer relations
Customer satisfaction
Customers
Death & dying
Decision making models
Digitization
e-Commerce/e-business
Economic conditions
Electronic commerce
Inactive
Information technology
IT in Business
Organizations
Recovery
Research Paper
Special Issue on “Data Science and Business Analytics”
Transparency
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Summary:As digitization supports customers in gaining increased market transparency (Desai Hastings Law Journal, 65 (6), 1469–1482, 2014 ), migrating from one organization to another (“customer migration”) is becoming easier and more attractive. Thus, taking measures to regain customers who terminated their relationship (“customer recovery”) has become increasingly important for organizations. With the growing importance of customer recovery in present times, organizations face even more challenges pertaining to risk of making wrong investment decisions. Organizations can either mistakenly invest in customer relations that are “alive” or irretrievably “dead.” Furthermore, it has the risk of not investing in inactive customer relations that have a chance to be revived (“dying”). Consequently, it is necessary for organizations to consider the probability that a customer relation is “alive,” “dying,” or “dead” when deciding on customer recovery. Based on these probabilities, an economically reasonable decision has to be made on whether to invest in the recovery of an individual customer relationship. Accordingly, based on a comprehensive discussion of related work, we propose a formal decision model on whether to invest in customer relation recovery. To demonstrate the decision model’s applicability, an illustrative case with sample calculation is presented and expert interviews are conducted.
ISSN:1019-6781
1422-8890
DOI:10.1007/s12525-018-0289-2