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Why Offering Rewards to Stay Can Drive Customers Away

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Most companies work hard to lure customers -- and once they have us, they want to keep us. Hence the development of the “retention campaign” -- programs of rewards, recommendations and offers designed to compel us to continue our patronage of those companies. On the surface, this strategy makes perfect sense.

Wharton marketing professor Raghuram Iyengar, Martin Schleicher of the IAE Business School in Buenos Aires and Eva Ascarza of Columbia Business School dug into the questions of when, why and on whom these marketing tactics worked. Their paper, “The Perils of Proactive Churn Prevention Using Plan Recommendations,” includes the counter-intuitive result that frequently, the results of these campaigns are exactly the opposite of what was intended.

In this interview with Knowledge@Wharton, Iyengar explains what they found, and why “retention” is a lot more complicated than one might expect.

More: http://knlg.net/1HvY892

Published in: Business, Marketing
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