Customer churn is inevitable. Customers will abandon products and services after years of using them. And they will leave and switch to a competitor even if they’ve been satisfied customers. The reality is that in today's increasingly dynamic marketplace, consumers are spoiled for choice when it comes to brands, and in many cases, face low barriers to make a change. In addition, with the continued digital revolution, advertisers have more ways than ever before to reach them at the moment it really matters.
As companies monitor their customer churn and ask the questions “Why? What happened?” the answer is never simple. Customer churn can be related to price, performance, the competition, product, service, support and any combination thereof.
What marketers know is that customer departures and defections can rarely if ever be attributed to a single reason based on a single episode at a single point in time. Customer churn is often the result of many factors that continually change over time. Unfortunately, by the time most marketers realize that a customer is at risk of churning, they don’t have enough time to act in ways that will preempt it.
But that doesn’t stop marketers from investing heavily in trying.
Nearly every CMO is focused on how to keep customers longer and increase their lifetime value. Key to customer retention success is understanding customer churn, and being able to analyze, predict and influence the behavior of customers by deploying the right marketing actions at the right time. The challenge, however, is that the analytics underpinning retention marketing programs relies on churn models that are often static, which results in retention marketing that is too late in influencing the customer.
So how frequently do most churn models score customers? And if it were more often, would a marketer’s ability to accurately predict churn improve?