The campaign wastage you didn’t have to have

Every day direct marketing is literally chasing customers out the door – OK, so not literally (it’s not like the envelopes have turned wild) but the effect is the same.

The fact is churn can be triggered by your active marketing campaign. Effectively your retention campaign can be having the opposite effect on some customers – they would have remained customers if you had left them alone. We rather descriptively call these customers ’sleeping dogs’ (from the saying let sleeping dogs lie) or – perhaps more politically correct – ‘do-not-disturbs’.

It’s a real phenomenon.

A mobile phone operator ran a retention mailing that increased churn from nine percent to ten percent. Imagine walking into your boss’ office to announce the expensive direct marketing campaign not only cost the company the campaign budget, it also drove recurring revenue out of the business.

As it turns out, just 30 percent of those targeted were ’savable’. Using Uplift Modelling this ’savable’ sub-segment was identifed for another retention campaign but with very different results – this time positive responses reduced churn to 7.8 percent across the retention segment.

The 1.2 percent churn saving was worth more that US$8 million per year.

The numbers tell a very convincing story – now just extrapolate this scenario onto the last direct marketing campaign you ran. What happened with your sleeping dogs?

 

This entry was posted on Monday, July 6th, 2009 at 5:54 pm and is filed under For Direct Marketers. You can follow any responses to this entry through the RSS 2.0 feed.

 

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