Churn your best customers to increase Customer Life Time Value

Free Lunchtime Research Seminar

13:00 - 14:00

What managers can learn from Clash of Clans and Pokémon Go counter-intuitive practice

Join us for a free lunchtime research seminar to learn more about how to increase Customer Life Time Value. Dr Michael Haenlein, Professor of Marketing at ESCP Europe, will discuss amongst other things 'product platforms' and how cross promotion can churn customers of current products to newer offerings. Admission is free but please register.

For more see the summary:

In mobile digital environments, we observe increasing use of cross-promotion activities in which firms proactively churn their customers toward other products. This practice may appear to challenge the conventional wisdom of the importance of customer retention, in particular of high-value customers. Yet past work in this area has largely focused on the case of a single product, while firms are increasingly advised to manage their offerings as “product platforms” that consist of families of products with a common underlying logic. Taking a product platform view, when a new product enters the market, users of current products may be good candidates for acquisition efforts toward the new offering. Applying a customer lifetime value (CLV) approach and using the digital gaming industry as an example, we show that when customer engagement declines over time, it should be in the firm’s interest to use cross promotion to churn even its best customers from current products and transfer them to a newer product. We examine the factors that affect the profitability of moving from a single product lifetime value to product platform lifetime value; consider the possible impact of other factors such as social influence on other customers; demonstrate sensitivity analysis of customer transferal for the case of a mobile gaming company; and discuss the implications for the results on the management of customers in the contemporary market environment.

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