Some customers would rather leave without saying goodbye

摘要

Retaining customers is one of the challenges in customer management. Especially in digital marketing era, where there is a proliferation of free and freemium-type pricing schemes, retaining customers is difficult. So customers may choose to exit overtly (termed overt churner) or silently disappear (termed silent churners). These settings, according to the authors constitute a hybrid of the standard contractual and non-contractual categorizations of customer-firm relationships. The article explores such hybrid settings by analyzing customer behavior in two different contexts: a daily deal website and a performing arts organization. The study separates silent churners from overt churners and attempts to understand and predict both types of churns. Overt churners tend to interact more, tend to frequently consider the firm's communications (i.e., open emails received from the firm) and rarely engage with the content (e.g., they do not dick on links in the emails). This suggests that such customers are not finding the right offering and after repeated disappointments, terminate their relationship with the firm or otherwise leave without saying goodbye. To accommodate and separate both types of churn, a hidden Markov model is developed which captures different latent states of customer behavior: those customers who are at risk of overtly churning (captured by an at risk state), those who have silently churned (captured by a silently gone state), and those who plan to continue interacting with the firm (captured by an engaged state). Further factors such as the content and quality of the firm's communications are examined to understand customers' transitions among (latent) states, as well as impact their behavior (given state membership). The model demonstrates that different firm actions are needed to mitigate the risks of overt and silent churn. Sending communications with better content to customers in the at risk (of overtly churning) state can encourage them to move to a state of engagement where they are more likely to click on the email and less likely to overtly churn. Once a customer transitions to the silently gone state, the firm is highly unlikely to reengage the customer with previously used communication methods.