• Title/Summary/Keyword: Customer Retention Rate

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Dynamic Customer Population Management Model at Aggregate Level

  • Kim, Geon-Ha
    • Management Science and Financial Engineering
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    • v.16 no.3
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    • pp.49-70
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    • 2010
  • Customer population management models can be classified into three categories: the first category includes the models that analyze the customer population at cohort level; the second one deals with the customer population at aggregate level; the third one has interest in the interactions among the customer populations in the competitive market. Our study proposes a model that can analyze the dynamics of customer population in consumer-durables market at aggregate level. The dynamics of customer population includes the retention curves from the purchase or at a specific duration time, the duration time expectancy at a specific duration time, and customer population growth or decline including net replacement rate, intrinsic rate of increase, and the generation time of customer population. For this study, we adopt mathematical ecology models, redefine them, and restructure interdisciplinary models to analyze the dynamics of customer population at aggregate level. We use the data of previous research on dynamic customer population management at cohort level to compare its results with those of ours and to demonstrate the useful analytical effects which the precious research cannot provide for marketers.

A Study of Customer Churn by Analysing CRM Customer Data (CRM 고객데이터 분석을 통한 이탈고객 연구)

  • Kim, Sang Yong;Song, Ji Yeon;Lee, Gi Soon
    • Asia Marketing Journal
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    • v.7 no.1
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    • pp.21-42
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    • 2005
  • Customer Relationship Management (CRM) is a corporate marketing strategy maintaining and managing customers. And with CRM companies maximize the customer's value through a series of processes of new customer retention, VIP customer retention, customer value increase, potential customer activation, and customers for lifetime by collecting the customer information and taking advantage of it effectively. In particular, as the competitive environment is changing rapidly and getting more intense, maintaining the customer retention through customer churn management becomes more important in order to increase the customer value for maximizing the company's profit and to build up the relationship with customers. For example, the financial industry has managed the customer churn with the concept of customer segmentation. Recently the customer retention and churn management is becoming increasingly important in all business fields as well as financial industry since the companies expect the effect of preventing the customer churn by identifying characteristics of customers. However, despite the increasing interest and importance of the management of the customer churn, not many of studies are systematically executed by analyzing the data of customer churn. In this study we analyze the actual data of CRM activities for the customer retention, specifically the data of TV home-shopping. By doing so, we hope to identify the differences of demographic attributes and transaction specific characteristics in consumer behaviors between the churning customer and the retained customers. In addition, we try to find out the variables which can impact the churning of the customers and to predict the churn rate of individual customer through our proposed model of customer churn. In the end, based on our findings we suggest the possible marketing strategies for TV home-shopping companies.

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The Influence of Loyalty Program on the Effect of Customer Retention: Focused on Education Service Industry (고객보상 프로그램이 고객 유지에 미치는 효과: 교육 서비스 산업을 중심으로)

  • Jeon, Hoseong
    • Asia Marketing Journal
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    • v.13 no.3
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    • pp.25-53
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    • 2011
  • This study probes the effect of loyalty program on the customer retention based on the real transaction data(n=2,892) acquired from education service industry. We try to figure out the outcomes of reward program through more than 1 year-long data gathered and analyzed according to quasi-experimental design(i.e., before and after design). We adopt this kinds of research scheme in regard that previous studies measured the effect of loyalty program by dividing the customers into two group(i.e., members vs. non-members) after the firms or stores had started the program. We believe that it might not avoid the self-selection bias. The research questions of this study could be explained such as: First, most research said that the loyalty programs could increase the customer loyalty and contribute to the sustainable growth of company. But there are little confirmation that this promotional tool could be justified in terms of financial perspective. Thus, we are interested in both the retention rate and financial outcomes caused by the introduction of loyalty programs. Second, reward programs target mainly current customer. Especially CRM(customer relationship management) said that it is more profitable for company to build positive relationship with current customer instead of pursuing new customer. And it claims that reward program is excellent means to achieve this goal. For this purpose, we check in this study whether there is a interaction effect between loyalty program and customer type in retaining customer. Third, it is said that dis-satisfied customers are more likely to leave the company than satisfied customers. While, Bolton, Kannan and Bramlett(2000) claimed that reward program could contribute to minimize the effect of negative service by building emotional link with customer, it is not empirically confirmed. This point of view explained that the loyalty programs might work as exit barrier to current customer. Thus, this study tries to identify whether there is a interaction effect between loyalty program and service experience in keeping customer. To achieve this purpose, this study adopt both Kaplan-Meier survival analysis and Cox proportional hazard model. The research outcomes show that the average retention period is 179 days before introducing loyalty program but it is increased to 227 days after reward is given to the customers. Since this difference is statistically significant, it could be said that H1 is supported. In addition, the contribution margin coming from increased transaction period is bigger than the cost for administering loyalty programs. To address other research questions, we probe the interaction effect between loyalty program and other factors(i.e., customer type and service experience) affecting it. The analysis of Cox proportional hazard model said that the current customer is more likely to engage in building relationship with company compared to new customer. In addition, retention rate of satisfied customer is significantly increased in relation to dis-satisfied customer. Interestingly, the transaction period of dis-satisfied customer is notably increased after introducing loyalty programs. Thus, it could be said that H2, H3, and H4 are also supported. In summary, we found that the loyalty programs have values as a promotional tool in forming positive relationship with customer and building exit barrier.

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A Study on the Effect of Sustainable Supply Chain Activities on the Performance of Supply Chain Participants -Focusing on the performance creation process of suppliers and buyers- (지속가능 공급망 활동이 공급망 참여 기업의 성과에 미치는 영향에 관한 연구 -공급사 및 구매사의 성과창출 과정을 중심으로-)

  • Park, Eun Shil;Choi, Do Young
    • Journal of Digital Convergence
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    • v.20 no.1
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    • pp.107-117
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    • 2022
  • This study aims to examine the relationship between the economic, environmental and social activities of sustainable supply chains and the customer satisfaction and customer retention rate, which are the final results in the supplier's operational performance and the buyer's market performance. The survey was conducted on employees in charge of supply chain management, purchasing company, partner company, and logistics management in the company. The final 193 valid data were analyzed to verify the research hypothesis. The results of the study showed that the economic and social activities of the sustainable supply chain had a positive effect on the supplier performance and the purchaser performance, but environmental activities had a negative effect on the supplier performance. In addition, the purchasing company performance has a positive effect on customer satisfaction and customer retention rate. This study provides a theoretical basis for sustainable supply chain activities to affect the operating performance of suppliers and the market performance of buyers, and suggests implications for enhancing the competitiveness of companies through the performance creation process that affects customer performance.

A Target Model Development Applying Scoring Method for Sale of DATA Additional Charge Service Product in a Mobile Telephone Company A (고객 스코어링 방법을 활용한 데이터 통화료 정액제 타겟 모델 개발)

  • Chun, Heui-Ju
    • The Korean Journal of Applied Statistics
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    • v.21 no.5
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    • pp.791-799
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    • 2008
  • Ansim Flat DATA Plan is a DATA additional service product related to DATA call in a mobile telephone company A. Up to now, the company A is selling it by outbound TM after targeting customers which used data within specific price band. In this paper, we propose a targeting method applying score model combining response rate and retention rate by data mining. The suggested target model is to find customers more likely not only to respond to outbound TM but also to retain Ansim Flat DATA Plan. The proposed targeting method is expected to improve both from 23.7% to 38.8% in the response rate and from 53.2% to 61.4% in the retention rate.

Comparative Study of Dimension Reduction Methods for Highly Imbalanced Overlapping Churn Data

  • Lee, Sujee;Koo, Bonhyo;Jung, Kyu-Hwan
    • Industrial Engineering and Management Systems
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    • v.13 no.4
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    • pp.454-462
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    • 2014
  • Retention of possible churning customer is one of the most important issues in customer relationship management, so companies try to predict churn customers using their large-scale high-dimensional data. This study focuses on dealing with large data sets by reducing the dimensionality. By using six different dimension reduction methods-Principal Component Analysis (PCA), factor analysis (FA), locally linear embedding (LLE), local tangent space alignment (LTSA), locally preserving projections (LPP), and deep auto-encoder-our experiments apply each dimension reduction method to the training data, build a classification model using the mapped data and then measure the performance using hit rate to compare the dimension reduction methods. In the result, PCA shows good performance despite its simplicity, and the deep auto-encoder gives the best overall performance. These results can be explained by the characteristics of the churn prediction data that is highly correlated and overlapped over the classes. We also proposed a simple out-of-sample extension method for the nonlinear dimension reduction methods, LLE and LTSA, utilizing the characteristic of the data.

A Methodology of Customer Churn Prediction based on Two-Dimensional Loyalty Segmentation (이차원 고객충성도 세그먼트 기반의 고객이탈예측 방법론)

  • Kim, Hyung Su;Hong, Seung Woo
    • Journal of Intelligence and Information Systems
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    • v.26 no.4
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    • pp.111-126
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    • 2020
  • Most industries have recently become aware of the importance of customer lifetime value as they are exposed to a competitive environment. As a result, preventing customers from churn is becoming a more important business issue than securing new customers. This is because maintaining churn customers is far more economical than securing new customers, and in fact, the acquisition cost of new customers is known to be five to six times higher than the maintenance cost of churn customers. Also, Companies that effectively prevent customer churn and improve customer retention rates are known to have a positive effect on not only increasing the company's profitability but also improving its brand image by improving customer satisfaction. Predicting customer churn, which had been conducted as a sub-research area for CRM, has recently become more important as a big data-based performance marketing theme due to the development of business machine learning technology. Until now, research on customer churn prediction has been carried out actively in such sectors as the mobile telecommunication industry, the financial industry, the distribution industry, and the game industry, which are highly competitive and urgent to manage churn. In addition, These churn prediction studies were focused on improving the performance of the churn prediction model itself, such as simply comparing the performance of various models, exploring features that are effective in forecasting departures, or developing new ensemble techniques, and were limited in terms of practical utilization because most studies considered the entire customer group as a group and developed a predictive model. As such, the main purpose of the existing related research was to improve the performance of the predictive model itself, and there was a relatively lack of research to improve the overall customer churn prediction process. In fact, customers in the business have different behavior characteristics due to heterogeneous transaction patterns, and the resulting churn rate is different, so it is unreasonable to assume the entire customer as a single customer group. Therefore, it is desirable to segment customers according to customer classification criteria, such as loyalty, and to operate an appropriate churn prediction model individually, in order to carry out effective customer churn predictions in heterogeneous industries. Of course, in some studies, there are studies in which customers are subdivided using clustering techniques and applied a churn prediction model for individual customer groups. Although this process of predicting churn can produce better predictions than a single predict model for the entire customer population, there is still room for improvement in that clustering is a mechanical, exploratory grouping technique that calculates distances based on inputs and does not reflect the strategic intent of an entity such as loyalties. This study proposes a segment-based customer departure prediction process (CCP/2DL: Customer Churn Prediction based on Two-Dimensional Loyalty segmentation) based on two-dimensional customer loyalty, assuming that successful customer churn management can be better done through improvements in the overall process than through the performance of the model itself. CCP/2DL is a series of churn prediction processes that segment two-way, quantitative and qualitative loyalty-based customer, conduct secondary grouping of customer segments according to churn patterns, and then independently apply heterogeneous churn prediction models for each churn pattern group. Performance comparisons were performed with the most commonly applied the General churn prediction process and the Clustering-based churn prediction process to assess the relative excellence of the proposed churn prediction process. The General churn prediction process used in this study refers to the process of predicting a single group of customers simply intended to be predicted as a machine learning model, using the most commonly used churn predicting method. And the Clustering-based churn prediction process is a method of first using clustering techniques to segment customers and implement a churn prediction model for each individual group. In cooperation with a global NGO, the proposed CCP/2DL performance showed better performance than other methodologies for predicting churn. This churn prediction process is not only effective in predicting churn, but can also be a strategic basis for obtaining a variety of customer observations and carrying out other related performance marketing activities.

The Effects of Mobile Application Quality on Satisfaction and Intention to Pay Mobile Application (모바일 애플리케이션의 품질이 사용자 만족과 애플리케이션 지불의도에 미치는 영향)

  • Kim, Sang-Hyun;Park, Hyun-Sun
    • The Journal of Information Systems
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    • v.20 no.3
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    • pp.81-109
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    • 2011
  • The increase in the number of smartphone users has recently been steep, which started to offer companies and individuals more opportunities to enter into a new business field. Furthermore, the smartphone applications have become one of the hottest topics inside and outside the mobile industry. Still the market is in its infancy and intention to pay of charged application of most smartphone users is relatively low. However, rate of charged application in appstore is expected to be increase steadily for some years to come. In this perspective, it is important to consider the smartphone mobile application. Research on smartphone application is still in its early stage. Thus, the purpose of this study is to find what are the effective factors on user satisfaction and intention to pay of mobile application. Based on information system success model, we proposed system quality(stability, usability, security), information quality(timeliness, accuracy, enjoyment) and service quality(reactivity, reliability, empathy) as factors to effect on user satisfaction in mobile application. The results showed that stability, usability, timeliness, accuracy, enjoyment, reactivity and empathy affected significantly user satisfaction. The relationship among satisfaction and intention to pay of mobile application was significantly supported. The implications of the findings is that firms and individual developers of mobile application should focus on customer retention through enhancing satisfaction and quality.

The Effect of Inflow Into a Site Via Facebook on Customers' Revisit : Drawing on the Moderating Effects of the Average Site Visit-Depth (기업 페이스북을 통한 사이트 유입이 고객 재방문에 미치는 영향 : 사이트 평균 방문깊이의 조절효과를 중심으로)

  • Lee, Jung Won;Park, Cheol
    • Journal of Information Technology Services
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    • v.18 no.2
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    • pp.1-16
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    • 2019
  • Social media is one of the important marketing channels for companies, changing the way interacting with customers. Marketers attract participation from customers' in social media platforms by producing branded content, which helps them gain various marketing results such as brand awareness, web traffic, and sales. The number of the empirical studies on the effects of social media on marketing performance is still low although various success stories and studies have been published. In particular, IT companies are trying to attract users onto their websites with social media content and promotions; however, they regard the number of the visitors as a vanity metric, which has little effectiveness. The study examined the Effect of the site introduced via Facebook, a typical social medium, on customers' revisit. Precedent studies proved that revisit, one of forms of major visit for satisfactory results of a website, is suitable for analyzing the operational output on Facebook pages. The results of the study demonstrated that Facebook content has a positive impact on website inflows and revisits. Also, it turns out that the higher the average website visit depth reinforces the positive relationship between the rate of the inflow and that of the site revisit.

A Comparative Study of The Malcolm Baldrige Award Recipients in Healthcare Institutions: 2007-2016 (The Malcolm Baldrige Award 수상 의료기관 비교연구: 2007-2016년)

  • Lee, DonHee
    • Journal of Korean Society for Quality Management
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    • v.46 no.4
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    • pp.983-1000
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    • 2018
  • Purpose: The purpose of this study is to provide academic and practical implications based on the analysis results of similarities and differentiation of Malcolm Baldrige National Quality Award (MBNQA) in healthcare institutes from 2007 to 2016. Methods: This study examined the characteristics and similarities, the changes made for the most importantly considered, a degree of improvement of patient satisfaction, and employee retention rate of the MBNQA awarded 8 healthcare institutes announced by NIST during the period of 2007-2016. Results: First, the MBNQA awarded 8 healthcare institutes that maintained and implemented effective plans for a long period of time to improve the quality of care services. Second, these organizations were selected among the top 10% of the institutional evaluations in the medical field in the United States. Third, they have tried to continuously improve patient and potential customer and employee satisfaction. Fourth, it is shown that the quality improvement efforts have made long-term and continuous improvement efforts on average 4-5 years. Lastly, the increased number of patients and the improved organizational performance are twice higher than those of other healthcare institutions. Conclusion: The results of this study suggest that common and differentiation strategies of healthcare institutions should be a good benchmarking model for other competitive healthcare institutions.