Does outbound marketing enhance
customer retention?
The moderating role of customer loyalty-relationship
characteristics
ROBERT PAUL KORTENOEVER LEPE
s4138031
1
stSupervisor: Roelof Hars
Defense presentation overview
1. Introduction
2. Literature Review
3. Research Question and Hypotheses
4. Methodology
Introduction
Advantages - Outbound
Marketing
Disadvantages - Outbound
Marketing
Effect on Customer Retention
a. Direct
b. Familiarity
c. Short-term results
d. Brand awareness
e. Segmentation
a. Easy to ignore
b. Privacy concerns
c. Negative attitudes
a. Double- edged sword
b. Most studies focus on
maximizing response rate
and/or profitability
What is Outbound
Marketing?
Literature review
Outbound marketing activities can affect customer retention in both positive and negative ways
The effect of outbound marketing on customer retention depends on
the type of activity and the customer itself
ACADEMIC PERSPECTIVE
PRACTICAL PERSPECTIVE
A higher level of direct mail can increase the perceived level of
relationship investment
Excessive commercial activity can increase the
intention to churn
Wulf et al. (2001)
Kim et al. (2012)
Effective
cross-selling of products and/or services has a positive influence on
customer retention
Kumar et al. (2008)
Email marketing is more effective for customer retention than for customer acquisition (Chittenden and Rettie, 2003)
Email marketing
The effect is stronger for customers with higher/better relationship (loyalty)
characteristics
Proxies for customer loyalty
Positive effect on customer & attitudinal loyalty, trust and relational commitment (Doaei et al. 2011; Malliari and Sirkeci,2017).
Research Question and Hypotheses
H1: Email marketing has a positive influence on customer retention H2: Direct mail has a positive influence on customer retention
H3 a/b: The effect of Email marketing/ Direct mail on customer retention will be stronger as
relationship length increases
H4 a/b: H4a: The effect of Email marketing/ Direct mail on customer retention will be stronger on promoters
H5 a/b: The effect of Email marketing/ Direct mail on customer retention will be stronger as the number of products increases
Conceptual Model
Does outbound marketing enhance customer retention?
Main research question
What are the moderating effects of relationship length, NPS
promoters, and the number of products on the relationship
between outbound marketing and customer retention?
Methodology
DATA
SAMPLE
SELECTION
LOGIT MODEL
- Dutch insurance company
- It includes anonymized contact details, products purchased by
customers, socio-demographics, NPS activity, and whether the customer churned or not
- 11339 observations - 0 NAs
a. Q3 and Q4
- Q3 of 2016 to assess the frequency of direct mail/ email marketing
- Q4 2016 to evaluate the effects on customer retention
b. Why?
- Interested in the short-term /medium-term effects
- Ensure that both customers who churn and those who do not churn have equal opportunities when it comes to receive emails
2 MODELS
a. Effects of Email marketing and Direct Mail on customer retention
Results
Model 1
• Email marketing and Age have a significant positive effect on customer retention (p-value <0.05)
• Direct mail and Gender do not have a significant effect on customer retention at a confidence level of 95%.
Coefficient Odds Marginal effects Commercial emails 0.064 1.066 0.001
Age 0.026 1.026 0.0005
Model 2
• The moderation effects of Relationship Length, NPS promoters, and Number of products on the relationship between
Email Marketing/Direct Mail and customer retention are not significant at a confidence level of 95%.
• Email marketing , Age, Relationship length have a significant positive effect on customer retention (p-value <0.05)
Interpretation of the effects of Commercial
emails and Age
Coefficient Odds Marginal effects Commercial emails 0.052 1.053 0.001
Age 0.017 1.017 0.0003
Relationship Length 0.023 1.024 0.0005
Interpretation of the effects of Commercial
Results
Overview of the hypotheses
H1
H2
H3a
H3b
H4a
H4b
H5a
H5b
Email marketing has a positive influence on customer retention
Direct mail has a positive influence on customer retention
The effect of Email marketing on customer retention will be stronger as relationship length increases
The effect of Direct mail on customer retention will be stronger as relationship length increases
The effect of Email marketing on customer retention will be stronger on promoters
The effect of Direct mail on customer retention will be stronger on promoters
The effect of Email marketing on customer retention will be stronger as the number of products increases
The effect of Direct mail on customer retention will be stronger as the number of products increases
Accepted
Rejected
Rejected
Rejected
Rejected
Rejected
Rejected
Rejected
Outbound marketing does enhance customer retention, yet the
magnitude of such influence greatly depends on the type of activity.
Main research question
The relationship between outbound marketing activities and customer retention does not depend on customer loyalty/relationship characteristics.
Conclusion
Commercial emails help to retain customers
The effect does not depend on customer loyalty/relationship
characteristics.
Email marketing
Commercial mails do not help to retain customers
Direct mail
Long-term relationship customers are less likely to churn.
Relationship Length
Older customers are less likely to churn.
Age
Outbound marketing is
not a risk factor for
customer churn
No significant difference between
long-term/new customers;
Conclusion
LIMITATIONS
FUTURE RESEARCH
Not generalizable Quarterly data, short/medium term effect
Only 2 control variables
Design, Content, etc. not considered
Customer loyalty /relationship moderators
Selection effects
Other activities, i.e.
Telemarketing Other Aggregation Level, i.e. 1 year
Other moderators, i.e. Age
Effect of the design, content of the (e)mail 2 activities:
