The Impact of Forced and Reinforced Channel Migration Strategies on Churn: Evidence from a Quasi-Natural Experiment

Abstract

Firms increasingly face decisions about eliminating or downsizing channels that are costly or less efficient. Firms can employ several channel migration strategies to steer customers toward alternative channels. In this study, the authors focus on three different channel migration strategies: (1) forced migration, eliminating the phone channel; (2) reinforced migration, making the phone channel less visible; and (3) voluntary migration, giving consumers complete freedom to choose a channel. The authors investigate customers’ responses to these migration strategies in a contractual setting with a large-scale European insurance services provider. The results reveal that while reinforced channel migration does not lead to higher churn rates relative to voluntary migration, forced channel migration increases the average churn by 11.27 percentage points in absolute terms, representing a relative increase of 47%. The results suggest that reducing the visibility of a channel may provide benefits (fewer expenses) without affecting churn, whereas eliminating the channel provides more cost benefits (no channel expenses) while increasing churn. To help managers understand which approach (reinforced migration vs. forced migration) is preferable for a firm, the authors provide calculations showing that reinforced channel migration delivers higher customer lifetime value.