Think of them as the "walking dead." They're not ghosts or freaks from a horror movie, but rather a certain type of customer whose relationship with a company will soon be history.
The walking dead are "customers who currently maintain service but whose next action will be to discontinue all services, an important economic consequence to the firm," according to a new study that examines how the customers of a telecommunications firm acquire and discard services over time. Companies would be wise to identify their walking dead and not market additional services to them because there may be an unintended effect, the paper suggests.
"Not only are you going to waste marketing and advertising dollars, you're going to remind these customers they're dead," perhaps prompting them to cancel their service altogether, said Wharton marketing professor Peter S. Fader. "It's better to leave the walking dead alone." Fader co-authored the paper, titled "Modeling the Evolution of Customers' Service Portfolios," with Wharton marketing professor Eric T. Bradlow and David A. Schweidel, a marketing professor at the University of Wisconsin-Madison. Their paper has been submitted to the Journal of Marketing Research.
In examining the subscribing patterns of more than 3,000 customers of a major telecom firm over two years, the researchers also found that it's not necessarily a bad thing when customers cancel a particular service, e.g., a premium movie channel, as long as they maintain other ones. "Though conventional wisdom would argue that a customer who has dropped a service is less valuable, such customers have told the firm that they are still making active decisions about their service portfolio and are therefore more likely to acquire other services in the future," the authors write.
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