Briefs

Dec 12, 2002. (from SearchCRM) An interesting review of Churn modeling efforts. Companies mentioned include Wachovia Bank, slpInfoware, Quadstone, and @RISK.

Churn modeling is very much like gourmet cooking. When done well, it has a lot of science, a dash of finesse and even a pinch of intuition. With rates of customer defection reaching epidemic levels in industries like retail, travel, healthcare, and banking, predicting turnover has become significantly more important to business in recent years.

Take a simple example, like Wachovia Bank, headquartered in Charlotte, N.C. Wachovia looks at demographics, life events (divorce, losing jobs, opening a business, graduating kids, etc.), declines in account balance levels, and the like. They also conduct research on high value customers who have already defected, hoping to uncover other root causes.

SLP InfoWare, based in France, has a model (called Churn/CPS) which tracks multiple end-user defined churn behaviors, so that clients can engage and refine their retention strategies. One client, Cellular One of Puerto Rico, equips customer service agents with predicted at-risk customer behaviors, so they can apply any of several potential marketing approaches to reduce churn. Using software provided by SLP InfoWare, Cellular One calls customers who have been identified as likely to be delinquent. Using the Churn/CPS model, they've been able to reduce customer turnover by one-third. SLP estimates that with their model about 60% of churn behavior can be modified if spotted in advance.

The article also discusses churn modeling efforts from Quadstone and @RISK.

Here is the full story.