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How To Predict Churn

Posted on 10.22.2015

It is important for businesses, particularly subscription-based businesses, to monitor customer churn trends.

A customer is considered “churned” once he or she has stopped all interactions with a brand for a certain amount of time. Since subscription businesses generate just 15 to 25 percent of their revenues from new customers, it is particularly important for these type of businesses to retain customers and ensure that they don’t churn.

Fortunately, there are a few tell-tale signs that a customer is about to churn, as well as technology available that can help businesses identify consumers in danger of churning.

Three Signs a Customer is in Danger of Churning:

1. They stopped opening emails – a customer that was once actively opening a brand’s email messages and then either gradually or suddenly stops is definitely in danger of churning. Brands can try to win these customers back, however, with a re-engagement email campaign. Take Victoria’s Secret as an example. The retailer sent out a “We want you back!” email campaign that included a 20 percent off coupon in an effort to bring inactive email subscribers back in August (see image).

2. They are leaving negative reviews – a customer that is leaving complaints with customer service reps or on a company's online listing page is likely not very happy and won’t be making additional purchases any time soon. That said, businesses can try to reach out to these types of customers and resolve issues in order to save themselves from negative comments and from losing a customer. Yelp, for example, enables business owners to respond to negative reviews on their business page, which is definitely a step in the right direction when trying to retain a customer in danger of churning.

3. They stopped using the service.

If a customer has stopped using a service that they are paying for, it is likely they will not renew their membership, which is why businesses should identify inactive customers before it I too late. By doing so and offering a promotion, such as a 15 percent discount on their renewal membership, the customer will be more likely to renew and less likely to churn.

Three Companies that can Help:

1. Bluenose

Bluenose is a customer success platform that can help software-as-a-service (SaaS) businesses monitor their customers and identify those that are in jeopardy of churning. Bluenose provides its customers with alerts for customers that are in danger of churning and are ready for expansion. What’s more, Bluenose provides customer health scoring so businesses can monitor the satisfaction of all customers.

2. StatSoft

StatSoft, which is part of Dell Software, offers a churn analysis solution to help businesses identify customers likely to churn and help them improve their relationship with those customers. The company uses analytics to predict customer reactions to marketing campaigns and customer service initiatives, as well as helps user develop effective campaigns to target customers and increase profitability.

3. Kissmetrics

Kissmetrics offers an Analyze product that includes cohort reporting. With this feature, business can monitor online metrics and view the behavior of groups over time as market, competitors and customers change. This analysis enables users to identify which marketing campaigns are working and which are not. For instance, users can discover if a new pricing plan lead to cancellations and which customer groups lead to the most upsells.


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