Daily Churn Risk

Why is there so much theory on churn prevention? Smart business people know that business growth isn’t just about attracting new customers. Sure, bringing in new customers is exciting, and seeing the numbers grow makes you feel good, but it’s actually not the answer to profit. Customer retention is where it’s at – so let's take a look at the Churn Risk.

Definitions

In essence, churn means that a customer stops consuming from your business.  A churn probability is daily calculated for each individual customer based on RX Prediction™. This again results in an average company-wide churn risk.

RX Prediction – wait, what?

Prediction is performed via machine learning and searches data twins based on the following criteria:

• RFM Statistics (Recency, Frequency, and Monetary Value)
• Average Order Value
• Return Behaviour
• Order Quantity
• Demographics

Based on this information, RX predicts the likelihood that a customer will continue to place another order. Finally, the churn risk is calculated as follows:

With each day that passes after the last order, the risk of churn increases. However, if a customer places another order, the risk decreases.

Use Cases

Customer churn is a metric that no one really wants to take a look at, but everyone has to. Since churn is the counterpart of customer retention, it not only affects the size of your customer base but also has a direct impact on your customer lifetime value. The report answers the following questions:

• How healthy is your customer base?
• Do your measures basically lead to a reduction of churn risk?
• Is my customer quality developing in the right direction?
• Am I being able to keep my customers active?

Now, let's see how we can use Churn Risk to actually prevent Top Customers from Churning:

1. Identify Top Customers at Risk of Churning

     2. Synchronize the segment to your selection of third party integrations 

     3. Run Reactivation Campaigns!

What you Need

For this report to work properly, the following data must be imported:

• Order ID
• Order Date
• Stock Keeping Unit (SKU)
• Items Sold
• Item Price
• Customer ID
• Shipping Revenue
• VAT
• Discounts
• Product Returns
• Product Return Dates
• Customer Shipping Country
• Customer Shipping City

How to get More Details

The Daily Churn Risk is shown as a color-coded line chart followed by absolute figures. Trends get even more clear by the growth rate comparing each data point with the previous period.

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