Thursday, 28 March 2013

Customer Attrition Modeling (Analytics)

Churn or Attrition Modeling

Customer is the key for any business. As Don Peppers once said - the only value that a company adds during the lifetime is the Customer.

Losing customer is losing business. But, how to avoid them moving away?

How to measure Customer Attrition

How to know if the customer is leaving . Probably if he/she is not shopping / visiting / interacting / subscribing like the past, it is an indication that he/she might leave.

Good datamining should measure the customer attrition easily. Predicitve models can be built on data for Customer attrition.

The key data points to be considered for Attrition modeling are the Recency, Latency, Average Spend per Visit, Average Time spent on Website, Duration of Visit (Website) etc

The predictive model then attaches a probabily score to each customer. The least churner to the most ..

How to retain the customer?

Starbucks has its own Loyalty program -My Starbucks Rewards™ . One in four customers use the Loyalty card, which provides a wealth of data for Starbucks analyitcs team. The customers are then analyzed and segmented. The customers who are more Loyal are ignored! Yes, the ones who are about to Churn are Rewarded with appropriate offers. The offers are based on the past purchase history!

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