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Avoiding churn: Marketing's Holy Grail

I work for a company called Upromise, a loyalty program that helps families save for college. People enroll with us (our members) and shop with our partners (over 250 companies) and receive a rebate from these partners - these rebates accumulate in their college savings plans (like 529's) and is tax free. Partners gain loyalty and our customers get free money for college.

We are currently working on predicting churn for Upromise. We are defining churn as "not having shopped with any partner for XX months". And then we will model these members and find similar members and develop marketing programs to retain them.

My question is if there are different ways to define churn other than the above.

Identifying customers in an attrition mode, and then executing processes or messaging programs to stabilize them or enhance their loyalty behavior and emotional kinship and affinity is kind of a marketing 'holy grail'. If accomplished, it can monetize very quickly and offer real opportunities for growth.

We would define customers/clients likely to churn as indifferent (or less, i.e. could be disaffected to downright negative), that is having no relationship and emotional affiliation with the supplier and viewing them in pretty tactical, passive, transactional, and functional/cognitive ways. Locating them in the customer base requires some science, and we have developed a marketing research algorithm that not only identifies these indifferent customers, but also pinpoints their reasons for being so (especially relative to those customers we would define as being committed and active advocates for the supplier's products and services) and suggests roadmaps for bootstrapping them to more positive and productive status.

Contact me for more information about our methodology and process.

Read these other tips on churn from Michael:

Read about how to get your loyalty program started on the right foot.

This was first published in March 2005

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