Reducing churn from price increases : an experimental intervention

Abstract

Reducing customer churn while simultaneously increasing prices is a challenge in need of a successful intervention. This study takes an in-depth look into successful interventions that assist a business in retaining their customers while increasing prices. By identifying such successful methods, business can continue to have price optimisation strategies that can increase the value of the business through the growth in customer equity. By using an experimental design that takes place in a live setting on over 50,000 customers, interventions are tested to research whether they can have a causal relationship between the intervention and improved customer retention. Three different interventions target improving customer loyalty by offering them an additional benefit, providing justification of the increase through a personal phone call or both. The results of this research found that by simultaneously offering a customer an additional benefit and also creating a personal touch point by communicating directly with the customer telephonically in order to justify the increase had a significantly positive impact on customer retention. As an outcome, an additional level of depth can be added to the academic literature and a deeper insight into customer relationship management exists for businesses to learn from and grow their firm value.