Customer retention has been shown by academic researchers to be more profitableudthan customer acquisition. However, its implementation in the business environmentudhas not been so successful. One of the reasons for this is that customer retention canudbe achieved in several ways (i.e. loyalty programs, affinity cards and switching costs)udand that the translation from the concept of “retaining customers” to the actions andudstrategies to retain them is not always easy.udOne of the most attractive strategies to ensure that customers remain within theudorganisation is through cross-selling and up-selling. In short, the objective is toudincrease the number (or the value) of the products that a customer buys from audcompany to make it more difficult for him/her to leave. Whilst academic research hasuddeeply investigated the concepts of loyalty, retention programs and trust, amongstudothers, cross-selling has not received the same level of attention. Moreover, existingudresearch on cross-selling has been focused on products rather than on services.udFinally, this research has mostly been conceptual in nature, with limited attempts toudmodel or design practical cross-selling and up-selling strategies. In order for crosssellingudand up-selling to be effective retention strategies, they need to be tailored toudthe needs of the customer. The offer must be adequate in terms of the target (who isudgoing to buy the product), the content (what is going to be purchased) and a timeud(when is the right moment to offer the new product).udThis thesis investigates customer retention and cross-selling and up-selling from audpractical point of view in the financial services industry. Firstly, it assesses theudimportance of the concepts of customer retention and cross-selling and up-sellingudthrough several interviews conducted with financial services providers (insuranceudcompanies, building societies and independent financial industry bodies). Havingudestablished the relevance of these concepts in the industry, the next step developedudand applied a framework to design cross-selling and up-selling strategies. Thisudframework, named the “Who-What-When” framework, was applied to theudtransactional and customer data bases of two financial services providers (a Spanishudinsurance company and a UK building society). The “Who-What-When” methodudiiudbegins by segmenting the customer base in order to understand the characteristicsudand potential of each customer. It then, moves to modelling purchase propensityudmodels, understanding the relationships between products in order to determine whatudproduct should be offered to each segment, according to their characteristics andudtheir consumption history. Finally, it analyses the time sequence of the purchases inudorder to determine the right time (when the purchase is more likely to occur) toudapproach each customer, bearing in mind how they behave and the maturity of theudproducts already held.udThe contribution of this thesis is twofold. From an academic point of view, theudresearch demonstrates the importance of customer retention and cross-selling in theudfinancial services industry, being both recognised as key strategic and tacticaludapproaches for the future of the industry. Secondly, from a practical point of view, itudcontributes by developing an analytical framework to discover and design crosssellingudand up-selling strategies, aimed at retaining customers. This is achievedudthrough the ‘Who-What-When’ framework which takes into account customerudcharacteristics, consumption patterns and acquisition sequence to model cross-sellingudactivities. Therefore, it refutes the traditional approach that ‘one size fits all’,udadvocating tailored strategies. Finally, this research highlights, from the empiricaludanalysis, how repurchase decision is highly influenced by the length of theudrelationship with the provider and the type of products already purchased.udUnderstanding these factors is key to successfully retaining customers via crossselling.
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