Metrics and measurement
Churn prediction is the use of a predictive model to estimate which customers are about to stop buying or cancel a service.
The model reads signals such as falling purchases, calls to customer service or lower use of the service, and gives each customer a probability of leaving. Born in telecoms and banking, where customers have a contract and churn shows on the day of cancellation, it is used today in every subscription business. It allows action before the customer leaves, with targeted retention, and its worth is measured by the customer lifetime value it saves.
An example
A telecoms company calls the customers the model flags as at risk with a dedicated offer.
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