Cited by 295Customer churn and segmentationCustomer Service Quality and LoyaltyConsumer Market Behavior and Pricing

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Retention Futility: Targeting High-Risk Customers Might be Ineffective

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Ascarza, Eva·2018·Journal of Marketing Research

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Abstract

Companies in a variety of sectors are increasingly managing customer churn proactively, generally by detecting customers at the highest risk of churning and targeting retention efforts towards them. While there is a vast literature on developing churn prediction models that identify customers at the highest risk of churning, no research has investigated whether it is indeed optimal to target those individuals. Combining two field experiments with machine learning techniques, the author demonstrates that customers identified as having the highest risk of churning are not necessarily the best targets for proactive churn programs. This finding is not only contrary to common wisdom but also suggests that retention programs are sometimes futile not because firms offer the wrong incentives but because they do not apply the right targeting rules. Accordingly, firms should focus their modeling efforts on identifying the observed heterogeneity in response to the intervention and to target customers on the basis of their sensitivity to the intervention, regardless of their risk of churning. This approach is empirically demonstrated to be significantly more effective than the standard practice of targeting customers with the highest risk of churning. More broadly, the author encourages firms and researchers using randomized trials (or A/B tests) to look beyond the average effect of interventions and leverage the observed heterogeneity in customers' response to select customer targets.

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Authors: Ascarza, E.
Affiliations: Columbia University (US)
Corresponding author: Ascarza, Eva
ORCID: Ascarza, Eva
Venue: Journal of Marketing Research
Publisher: SAGE Publications
Published: 2018-02
Volume: 55
Issue: 1
Pages: 80-98
ISSN: 0022-2437 (ISSN-L)
1547-7193
DOI: 10.1509/jmr.16.0163
OpenAlex: W3122149192
Cited by: 295
References: 56
Citations by year: 2026: 48 · 2025: 38 · 2024: 41 · 2023: 34 · 2022: 37 · 2021: 36 · 2020: 33 · 2019: 18 · 2018: 5
FWCI: 29.69
Type: journal article
Language: en
Open access: green
doi.org
Licence: journals.sagepub.com/page/policies/text-and-data-mining-license (tdm)
Locations: Journal of Marketing Research (publishedVersion)
SSRN Electronic Journal (acceptedVersion)
Topics: Social Sciences › Business, Management and Accounting › Marketing › Customer churn and segmentation
Social Sciences › Business, Management and Accounting › Marketing › Customer Service Quality and Loyalty
Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
Keywords: customer churn, customer retention, A/B testing, field experiments

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Retention Futility: Targeting High-Risk Customers Might be Ineffective

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