Customer Lifetime Value

Date : 29-03-19

Value Proposition


Provided the client with a robust strategy regarding to calculate the Lifetime Values of Customers to make crucial decisions related to churn rate and customer acquisition.

Impact of the Engagement


The Customer Retention Rate of potential churn customers was improved by 2% and Cross Selling/Up Selling of products to potential growth customers was improved by 0.4% (approx.).

Client

The client is a US based warehouse club that provides a wide range of merchandise. The club serves around 47 M US members across 660 branches in 47 states.

Trigger

The client had been experiencing a higher churn rate compared to the industry standards and the rate of customer acquisition had become stagnant over the past 6 months. They wanted to replace their existing strategy of customer acquisition and churn rate minimization with a holistic framework to tackle the industry challenges.

Challenge and Approach

Being a membership only club, the Client had felt the need to understand the current landscape of members so that those with a high propensity of improved engagement could be targeted and the potential churners could be retained. Devising a strategy to calculate the Lifetime Values for the customer base like that of the Client was a challenging because of the diverse nature. The customer data was segregated into Growth and Churned categories using past data. These categories were further segmented into different clusters using the past data. Lifetime Values were calculated for an average customer in these segments using various metrics. Traits which differentiated a potential growth customer from a potential churner were identified and statistical models were developed to measure the influence of these variables on the behavior of the customers. Potential growth and Potential churn customers were identified using these variables and strategies were devised to increase engagement with the potential growth customers and prevent the potential churners from moving out of the membership

Outcome

  • A Framework to identify potential churners using at risk model and devised campaigns to improve retention.
  • A Recommendation engine to identify potential growth customers for Cross Selling and Up Selling of products.
  • The Retention rate of potential churn customers improved by 2% when this strategy was implemented.
  • The Cross Selling and Up Selling of products was improved by 0.4% (approx.) when the potential growth customers were targeted./li>
  • An automated tool was developed with an intuitive UI to facilitate quick business decisions.

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