Churn Risk Distribution

When was the last time your business had a health check? Probably not recently enough.

Customer retention is the most important investment a company can make. In fact, that's because the cost of acquiring new customers is far greater than the cost of maintaining existing ones. Once you've gone through the effort (and expense) of acquiring new customers, you naturally want to keep them.

However, even the best customer retention strategies are not fail-safe. Sometimes customers slip away and stop responding to your prompts, becoming customers at-risk or even churned ones. When that happens, it's important to proactively try to win them back – so let's take a look at the Churn Risk Distribution report.

Definitions

To examine your customer health, your customer base is divided into 3 different groups: customers with a Churn Risk < 70%, Churn Risk 70-90%, or Churn Risk ≥ 90%. 

A churn risk is daily calculated for each individual customer based on RX Prediction™. 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 Behavior
• 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 every day that passes after the last order, the churn risk increases. However, when a customer places another order, the risk will decrease.

Use Cases

Knowing your customers brings real power, so put together all the data you are collecting about your customers and monitor your customer health to increase their engagement and retention. The report answers the following questions:

• Of all the customers you acquired, are you being able to keep them active or are you losing them?
• Do you need to counteract such developments?
• Can you take actions to prevent dormant customers from churning?
• Do I need to prioritize reactivation campaigns to retain my customers?

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 count of customers who have a Churn Risk < 70%, Churn Risk 70-90%, or Churn Risk ≥ 90% are shown as color-coded line charts followed by absolute figures. Trends get even more clear comparing each data point with the previous period.

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