Retention/Churn
Customer retention is a powerful profit multiplier: a 5% increase in customer retention can yield bottom-line increases of 25% to 50%, or even more.
If you can identify customers most likely to defect (and when), then you can develop retention programs to intercede in time. For example, a cellular customer starts making fewer – and shorter – calls. This customer also may be having trouble using the company’s IVR system, or they may be making late payments. A data mining algorithm can detect sequences of customer actions like these that typically lead to churn. And you can contact the cellular customer before they switch to a competitor.
Alternatively, data mining could be used to predict the likelihood of churn based on a combination of demographics and customer interactions. Each customer would get a score of 1 to 100, where 100 is the most likely to churn. At-risk customers could be routed automatically to customer service representatives trained in retention.
Find out how much retention can add to your bottom line. Contact us. We’ll do the calculations and help you develop programs to increase customer loyalty and profitability.
Other ways you can increase retention and profits include:
Target loyal customers from the start. Identify the characteristics of your most loyal and profitable customers, then target prospects with similar characteristics.
Use profitable sales channels. Change the mix of acquisition channels to focus on those that yield loyal customers.
Contact high-risk customers. Offer incentives to valuable customers to reward them for staying.
Differentiate service. Provide high-touch customer service to your most valuable customers; use lower-cost channels for less valuable customers.
Analyze defectors. Interview defectors using formal survey research techniques to identify the root causes of churn. Then, fix those causes.
