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Between death and life - a formal decision model to decide on customer recovery investments

Author

Listed:
  • Dominikus Kleindienst

    (FIM Research Center)

  • Daniela Waldmann

    (FIM Research Center
    Fraunhofer FIT - Project Group Business and Information Systems Engineering)

Abstract

As digitization supports customers in gaining increased market transparency (Desai Hastings Law Journal, 65(6), 1469–1482, 2014), migrating from one organization to another (“customer migration”) is becoming easier and more attractive. Thus, taking measures to regain customers who terminated their relationship (“customer recovery”) has become increasingly important for organizations. With the growing importance of customer recovery in present times, organizations face even more challenges pertaining to risk of making wrong investment decisions. Organizations can either mistakenly invest in customer relations that are “alive” or irretrievably “dead.” Furthermore, it has the risk of not investing in inactive customer relations that have a chance to be revived (“dying”). Consequently, it is necessary for organizations to consider the probability that a customer relation is “alive,” “dying,” or “dead” when deciding on customer recovery. Based on these probabilities, an economically reasonable decision has to be made on whether to invest in the recovery of an individual customer relationship. Accordingly, based on a comprehensive discussion of related work, we propose a formal decision model on whether to invest in customer relation recovery. To demonstrate the decision model’s applicability, an illustrative case with sample calculation is presented and expert interviews are conducted.

Suggested Citation

  • Dominikus Kleindienst & Daniela Waldmann, 2018. "Between death and life - a formal decision model to decide on customer recovery investments," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(4), pages 423-435, November.
    • Handle: RePEc:spr:elmark:v:28:y:2018:i:4:d:10.1007_s12525-018-0289-2
    DOI: 10.1007/s12525-018-0289-2
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    References listed on IDEAS

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    Cited by:

    1. Barbara Dinter & Jan Krämer, 2018. "Data-driven innovations in electronic markets," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(4), pages 403-405, November.

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    More about this item

    Keywords

    Customer data; Customer recovery; Digitization; Decision model;
    All these keywords.

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

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