Halt Customer Defection
Keep Your Customers Using Analytic Models
Imagine being able to predict which of your customers will stay your customers. To achieve this heightened understanding of customer behavior, many marketers are turning to modeling. When performed properly, modeling can help organizations predict which customers will remain and which ones will defect—or churn. An effective modeling approach takes into consideration a wealth of information from a variety of sources, and can help marketers determine the best allocation of their marketing dollars to improve ROI.
Defection erodes your customer base and occurs with the cancellation of an existing contract, non-renewal at the termination date of a contract, or cessation of purchase behavior over a period of time. Models can help you define what defection really means within your organization. Take a look at your historical data to determine which customers did—and did not—renew contracts or continue purchasing from the previous year or two.
Modeling also enables you to create a profile, or fingerprint, of the two groups, which will allow you to see how they differ. This fingerprint also will help you predict which customers are likely to defect by including differentiating characteristics around purchasing behavior and lifestyle demographics. When added to a model, transactional data provides an analytical tool that can give you insight applicable to your entire customer base.
Internal and External Data
Several key types of internal and external data are needed to build successful models. Here’s a look at key data to consider, and why:
• Customer interaction transaction data lends insight into what a customer is thinking by examining his or her past interaction behavior. This data typically includes promotion history, and sales and service interactions. Transactional data can come from multiple sources and should include data from all relevant customer touch points, including direct mail, outbound telemarketing, e-mail and all other inbound responses.