Customer Complaints, Defection and Lifetime Value

While customer complaints are a well-studied reality of business, no study has measured the impact of actual complaints and recoveries on subsequent customer purchasing. The authors develop a customer base model to investigate how effective recovery is in preventing customer churn. They calibrate it on panel data that track actual purchases, complaints and recoveries for 20,000 new customers of an internet and catalog retailer over 2.5 years....