Outflow Forecast
Find out which customers are likely to switch to a competitor so you can make each customer a personalized offer that will help retain them and increase their LTV
Customers trust the advice of their friends and family rather than that of businesses
Customers do not trust companies from which they buy as much as they used to
Customers do not trust company press releases
Customers don't trust ads on social media
According to ProfitWell, total customer acquisition costs (CAC) have been steadily rising for both B2B and B2C companies.
Over the past five years, total CAC has risen by nearly 50%, with organic costs growing at a faster rate.
As a result, more and more companies are seeking new opportunities to retain existing customers and increase LTV by extending the duration of their relationships.
Number of customers- Thousands, tens of thousands, hundreds of thousands
- It is not possible to identify the risk of customer churn simply by monitoring the customer base
- Conducting a survey of every departing customer to analyze churn is time-consuming, labor-intensive, and expensive
Number of characteristics- The CRM system stores dozens of static customer attributes that need to be segmented correctly
- In addition, the profile includes hundreds of calculated metrics that describe behavioral patterns
Rate of change- Customers interact with the company through a variety of channels 24/7/365, constantly updating their profiles
- A customer can perform anywhere from 1 transaction per month to 10 transactions per hour
Number of customers- Thousands, tens of thousands, hundreds of thousands
- It is not possible to identify the risk of customer churn simply by monitoring the customer base
- Conducting a survey of every departing customer to analyze churn is time-consuming, labor-intensive, and expensive
Number of characteristics- The CRM system stores dozens of static customer attributes that need to be segmented correctly
- In addition, the profile includes hundreds of calculated metrics that describe behavioral patterns
Rate of change- Customers interact with the company through a variety of channels 24/7/365, constantly updating their profiles
- A customer can perform anywhere from 1 transaction per month to 10 transactions per hour
- Outflow
A 5% reduction in the rate of customers switching to competitors increases profits by 25–45% (according to research) - Cross-selling
It is 4 to 6 times more profitable to sell an additional product to a regular customer than to sell a single product to a new one - Expenses
The cost of retaining an existing customer is 4–5 times lower than the cost of acquiring a new one
RBC Group enhances its clients' competitiveness by implementing modern business analytics, data integration and management, artificial intelligence, and advanced analytics systems.
Customer Churn Forecast
How is business success measured?
By the quality of the product? Absolutely!
By the professionalism of the staff? Of course!
By strategic development? Without a doubt!
But all of that takes a back seat when we talk about what really matters—the customers. No customers, no business—it’s that simple! And if customers are leaving for any reason, that’s a strong reason to ask yourself what exactly you’re doing wrong.
Churn prediction is the process of identifying customers at risk of leaving and developing a plan to retain them. And it is, in essence, a key tool for increasing a company’s competitiveness.
RBC Group offers you comprehensive solutions for predicting customer churn, which will not only help you identify customers likely to leave but also enable you to create personalized offers for them, extend your partnership, and increase LTV (Lifetime Value)—the profit a customer generates for your business over the course of their relationship with you.
Five Common Reasons Why Customers Leave
Reason #1: The product doesn’t live up to expectations
When you promise your audience an ambitious product, you must be certain that the potential buyer’s expectations will be met. Disappointment is one of the leading reasons for customers to leave.
E-commerce is full of examples where a company showcases something completely new and exclusive during a presentation, only to deliver a completely ordinary product in the end. The result is a lack of sales and a decline in the brand’s image.
Reason #2: The business failed to demonstrate the product’s value
Sometimes a brand fails to demonstrate the true value of its offering to the end consumer. A product may be of exceptional quality and highly useful, but you need to show the customer how this product will benefit them in practice, not just in theory.
Reason #3: The business strategy is inconsistent
Consistency is key to building trust with your audience. If your strategy is constantly changing and the company’s actions are unpredictable, you can forget about building a trusting relationship with your target audience.
Reason #4. The company uses outdated sales techniques
These techniques typically include manipulation and coercion to make a purchase. For example, forcing a customer to accept a store warranty when buying a discounted item. Or selling an item only as part of a bundle with another product that the customer may not even need.
Reason #5: Poor customer service
Even the best product won’t sell if the company’s customer service is frankly poor. It’s important to identify exactly which actions are turning customers away. As a rule, it’s one of three things:
- Communication that’s too slow.
- Disrespectful communication.
- Poor technical infrastructure, which prevents the company from providing adequate customer service.
Weaknesses in customer service must be identified promptly and eliminated. Then your target audience will be much more satisfied with the experience and will return.
Three steps to counter audience attrition
There are actually more steps than this, but we’ve grouped them into three main categories for convenience:
- Forecasting customer churn and assessing business resilience to this churn
- Developing a decision-making model for churn management in the context of customer lifetime value (CLTV)
- Identifying the customer segment most prone to churn and developing a marketing plan to retain them.
Analyzing customer churn is critical for businesses. This is because an existing customer is inherently more valuable than a potential one. There are several reasons for this:
- Existing customers are, by default, more loyal to a brand and are more willing to pay a premium for a product of proven quality and good service.
- The likelihood of repeat purchases rises to as high as 80% among existing regular customers. Among new customers, this figure is only 20–30%.
- Businesses spend significantly less to generate profit from existing customers. It is always cheaper than attracting a new audience.
The optimal strategy for analyzing customer churn is to map out your customer’s journey and compare it with your product. By identifying key touchpoints and comparing the target audience’s journey with churn data, you can easily pinpoint where and when the risk of churn is highest: during the first interaction, after one month, six months, a year, following a product update, and so on. This data can be used to reach out to lost customers to win them back or, at the very least, eliminate the reasons for their departure.
Want a comprehensive tool for analyzing and building a customer churn model? Submit a request on our website or request demo access right now. Experience all the benefits and features for yourself!
