Often the decision of which strategies to automate for customer retention vs. termination can be defined by integrating financial data with predictive analytics to create entirely new models of predictive financial value of customers (Sharma, 2008). Entertainment companies in gambling routinely use this approach to find the customers who are draining profits and also those who take a disproportionally high level of support and service to maintain (Baillie, 2003). Once the analysis has been completed of customer lifetime value by segment, companies can quickly determine the best possible approach to protect their most profitable customers and dis-incent others (Kapanen, 2004). Reducing customer churn through this technique shows significant potential, especially in industries that have relatively low lifetime customer loyalty.
Conclusion
Termination strategies must be automated in order for companies to continually stay profitable. The high churn industries of telecommunications for example, and cable television, need...
Scoring opportunities using constraint-based models also ensures that the predictability and performance of these systems will be accurate over time (Raab, 2008). As the costs increase of promotional programs and retaining customers, termination strategies are also critically important for mitigating long-term risk to any business.
