The Perils of Proactive Churn Prevention Using Plan Recommendations: Evidence from a Field Experiment

For your marketing

Possible founder application

Before prompting customers to downgrade or switch plans, run a controlled test and examine effects by usage pattern. A recommendation that improves price fit can still increase churn through salience or perceived value.

Reported result

What the study found

Churn over the following three months was 10% in the recommendation group versus 6% in the control group. Effects varied with pre-campaign usage patterns; customers with lower overage, lower variability and positive trends responded differently.

Research question

What the authors investigated

Can proactively recommending a lower-cost or better-fitting plan reduce churn, or can the recommendation make customers more likely to leave?

Design

A large-scale field experiment randomly offered some service customers plan recommendations and compared churn with a control group.

Sample and setting

Customers of a service provider with multiple usage plans; the paper examines how responses differ by prior overage, usage variability and usage trend.

Scope and transfer

Limitations to keep in view

A specific service plan and customer base; a proactive plan recommendation can have different meaning for SaaS users. The aggregate increase masks heterogeneity and is not a reason to avoid all plan guidance.

Research sources

Journal of Marketing Research abstract and author-hosted paper; the field experiment and 6% versus 10% churn figures are reported in the manuscript.