Question

In a recently published study, a telecommunications company tested four win-back offers with 40,000 customers, looking not only at which offer lured back the most customers, but also at which one was the most profitable. The results were as follows:

Strategy	Per-Person Cost	Success rate	ROI
DISCOUNT OFFER: $20 off for 6 months	$120	45%	668%
UPGRADE OFFER: A $35 movie channel free for 3 months	$105	41%	793%
BUNDLED OFFER: $20 off for 6 months, plus a $35 movie channel free for 3 months	$225	47%	302%
TAILORED OFFER: Customers who left over price get the discount	$120	45%	596%
Customers who left over service get the upgrade	$105

c) What additional recommendations would you make to the management?

Answer 1

Additional recommendations would be:

We can see that customers are most happy with bundled offer which has the highest success rate of 47%, but it is the least profitable.

Hence my recommendation to the management was to try and reduce the cost per person for this offer. They may try to do so by slightly increasing the price after they have taken initial dip in profitability. Alternatively, they can work with the company's vendors to try and reduce the cost to increase the profitability of this plan.

Therefore, we are suggesting that the business take a initial hit with profitability to create a loyal customer base for this bundled offer. And after some time, may be 6 months to a year, the price can be slightly increased so that the customers are now more loyal and understand that they can pay a slightly higher price of the services that they enjoy.