When customers call Cingular threatening to switch to another firm or asking for discounts operators see a handy thermometer that tells them the life time value (LTV) of the customer to the company. The higher the meter reading the more discounts the operator is allowed to offer the customer. The Consumerist has the details including excerpts from company documents explaining the system.
I’d hope they’d send this information to you on their bill.
I’m amazed that haggling is making a comeback (expanding into areas where one price for all was previously the norm).
I’ve got no problem with the concept at all–financial services does that type of research all the time. (I did some fundamental analysis of some of Citibank’s South American branches in the early 1990s.)
It’s a matter of asymmetrical information: If I know my provider (not Cingular) is doing something like that, I should try to shift now–as an LTV5–instead of waiting until the primary household user abandons the account.)
Mr. Gowder:
Sort of. Churn is an industry term referring to turnover, or the rate of customers lost due to switching elsewhere (often given as a percentage). In addition to profitability, they’re interested in how likely you are to switch.
John — thanks for the info. So churn is really an inverse measure of gullibility! (Cynical? Moi?)
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