When should a customer be defined as ‘lapsed’

Abstract

According to some estimates, 20-60 per cent of customers become inactive in any given year. Some of them are lost, but many could be reactivated as their potential for doing business with the supplier remains: they are dormant customers. In this context, the main problem that managers have to deal with is identifying exactly who these dormant customers are in order to offer them appropriate proposals for reactivation. This paper aims to provide a methodology that enables marketers to handle this opportunity better and thus to improve the segmentation of customers for reactivation purposes.