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Retention Campaigns Can Have the Opposite Effect

ShoppingKnowledge at Wharton recently published some interesting research about consumer behavior surrounding retention campaigns. The conclusion was counterintuitive: By offering rewards to large numbers of current customers, a cell phone company actually drove more customers away. By offering deals, the company awaked customers to the reality that they have choices, and that they can shop around for a deal that’s even better, said one of the authors, Wharton marketing professor Raghuram Iyengar. Effective retention campaigns must be customized to the needs of the individual customer, he said.

“Sometimes it’s best to let sleeping dogs lie,” Iyengar said.

Read about the research, and see a video interview with Iyengar, here.

Wharton is the business school at the University of Pennsylvania.

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