Customer retention in hybrid (e.g., contractual and non contractual) settings

What is it about?

It explores customer retention in “hybrid” settings. These are the increasingly common situations in which companies face the possibility of both observed and unobserved customer attrition (i.e., “silent” and “overt” churn) in the same pool of customers. This applies to many online-based services where customers have the choice to stop interacting with the firm either by formally terminating the relationship (e.g., cancelling their account) or by simply ignoring all communications coming from the firm.

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Why is it important?

We consistently find that, counter to previous studies that have not separated the two types of churn, overt churners tend to interact more, rather than less, with the firm prior to churning. That is, in those settings in which both types of churn are present, a high level of activity is not necessarily a good indicator of future engagement. In turn, it is associated with higher risk of overt churn. This finding is contrary to the conventional wisdom about customer behavior in contractual settings.