Relationship management is one of the determining factors in the business health. One of the most important factors of this connection is the ability to identify when a customer is likely to cancel a service. For that reason, it is necessary to take initiatives that maximize customer retention.
Therefore, projects that identify customers prone to churn have become a frequent concern for organizations, as the cost of retention is usually lower than the cost of acquisition.
Although it has gained the attention of many companies, there is no magic formula to solve the churn problem. In addition, the solution can have numerous complexities, like identifying the churn reason to apply different retention strategies.
Challenges
Is the cost of acquiring new customers greater than the cost of retention?
It is essential to observe financial and strategic expenses in order to acquire and retain customers, since for some companies the cost of acquisition may be 5x higher than the cost of retention.
What type of churn will be treated?
It is important to highlight that the churn increase for a product or service occurs in many ways, such as:
- Volunteer: when the customer chooses to cancel the service due to dissatisfaction or preference for a competitor.
- Silent: happens when a customer stops using the service for a long period and it does not generate costs — as using a credit card without monthly fees.
- Involuntary: when the consumer does not intend to cancel the service, but due to a negligence he may end up having his plan not renewed or canceled for irregular use, lack of payment, among others.
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