Churn Management is a constant effort to keep customers onboard, or to reduce at maximum the number of them leaving. Churn management is a term used primarily in the telecommunications sector where the indicator of customers leaving a company (churn rate) is one of the most significant. Moreover, it is a measurable and comparable indicator of customer satisfaction. This is especially true for mobile operators because it is one of the most competitive environments - customers have a strong tendency to leave to competitors. This applies to other subscription services too.
Why is it so important to maintain customers?
Customer retention costs (CRC) are always significantly lower than customer acquisition costs.
What does a churn manager do?
The churn management activities are de facto similar to any other efforts leading to customer retention. It focuses on a few basic topics:
- When do customers leave?
- Where do customers leave to?
- Why do customers leave?
- What customers want to leave?
- What products do customers abandon?
In addition to these topics, churn management also focuses on motivating customers not to leave. All of these efforts are more focused on valuable customers - those who are, for one reason or another, the most valuable for the company. The detection of customers who are potentially ready to leave to the competition is based on analysis of past customer’s behavior. To do so, we make use of data mining tools.
Besides, churn management also aims at preventing customers from reducing their purchases of the products or services, e.g. from switching to cheaper services. This is called product churn management. When customers are spending less money on our products or services, the influence on the business is similarly negative (unless compensated elsewhere) as if the customer left completely.