You’ve planned the perfect dinner party for some work colleagues and there’s been a lot of hype all week (generic marketing campaign). The menu is decided: your signature beef stew and a chickpea curry for the vegetarians; the table is beautifully set and you are all dressed and ready. You’ve spent hours preparing: cooking, cleaning, decorating; and you’re certain of success.

Who is missing?
Are you even aware of the passive churn occurring in your customer base?

When your guests arrive you are the consummate host. You introduce people with a personal touch, “This is Cara from marketing and she’s a runner like you,” you serve drinks and bring out snacks. Everyone seems happy – your onboarding process is a winner.

At this point you realise one couple is missing. By the time you text them they’re already in their PJs eating pizza (passive churn). Not great, especially as another person cancelled in the week due to a double booking (active churn).

Never mind. You put a smile on your face, present dinner with flair and the conversation is flowing. Your efforts have paid off and you’re feeling pleased with yourself. Until one of your guests, Ryan, admits that he’s not eating red meat this month and doesn’t like chickpeas either. Internally, you kick yourself for not connecting the dots, you’d had lunch this week and he hadn’t ordered his usual steak. Plus, another colleague had teased him about being a veggie. But let’s face it, you wouldn’t have changed the beef stew – it’s renowned – and thought the curry would do (failure to innovate and ascertain customer needs).

“No problem,” you reply, “how about some pasta with veggies?” Quick thinking saves the day and you ask your partner to make it so that you can focus on your guests. There’s a lull in the conversation so you introduce a controversial topic that creates friction and falls flat (incorrect assessment of your audience). Your partner arrives with the pasta causing a welcome distraction. However, at this point you realise that you forgot to mention that Ryan hates cooked carrot (lack of interdepartmental communication). Lo and behold, there are the orange beasts in a delicious four cheese sauce. You offer to remove them but Ryan brushes you off. Things are beginning to feel a little uncomfortable but you’re sure that your sumptuous chocolate fondants will rectify things.

Active churn can damage your business

Not ten minutes later, Ryan is making excuses to leave having barely touched his food (active churn). At this point, another couple are making the same kind of noises (potential churn) – they’re gluten intolerant by the way. Ah, that’s why they always refuse your homemade cookies – did they mention it before? Possibly when you first offered (not listening to all that your customers have to say). “I’ll get you some ice cream,” you respond not realising that your children finished the tub earlier (another lack of interdepartmental communication coupled with not delivering on promises). So instead you drum up some cheese and biscuits only to be informed of the gluten content in your crackers (finding an inappropriate solution because you’re still not paying attention). Gradually, you begin to realise your avoidable blunders but it’s a bit too late to salvage the party.

By the end of the evening you think, ‘Geesh, that was a rough night!’ but you forget to check in with your guests to find out how they experienced it (not obtaining appropriate feedback). As it turns out the beef stew went down well but the chickpea curry was lacking salt and had too much turmeric. You’d got the recipe off the internet and not tried it out first (inadequate product knowledge). All of your well laid plans have fallen flat!

So how does this relate to customer churn?

If you’ve been following the comments in brackets, you’ll have a pretty good idea. The clues to avoiding churn were all in the data but unfortunately, with all that you had on your plate, they were lost in the background. What this story illustrates is how the ineffective use of information can result in customer churn. We all know that’s bad for your bottom line because studies have shown that it costs at least five times more to acquire a customer than retain one.

Of course there are other negative impacts on your brand. Unhappy customers often post on social media and verbally discourage others to use you or actively promote another company over yours. Whilst that’s a less tangible effect to measure it definitely has consequences for your long term growth. So what can we do about it?

There’s no point going the extra mile in the wrong direction


Illuminate your data

There will always be customer churn – it’s a fact of doing business. But how can we successfully prevent avoidable attrition? Our dinner guests show that no matter how well prepared we are or how high our level of service, if we aren’t paying attention to the signs (implicit or explicit) we’re going to suffer higher rates of churn (active and passive). The online market is just too competitive for that not to be the case.

These days, customers engage at multiple touchpoints across an enterprise creating an enormous and continual flow of information. All of these interactions are opportunities to transform data into operational intelligence not only to provide for your clientele but to improve your company’s efficiency and effectiveness. See Locstat’s Customer 360  brochure.

Locstat illuminates the shadows in your data to provide relational feedback, which enables you to personalise your customer interactions and ultimately maximise revenue. But you will need the right technology to do this, i.e. a powerful database! Locstat’s next generation technology allows organisations to operationalise their aspirations, thereby giving you a ‘customer data intelligence’ capability. Our holy tech trinity of Complex Event Processing (CEP), graph database technology and a strong recommendation engine provides a unique level of feedback, functionality and foresight for a connected business.

Prevent customer churn by using the right technology mix
Use the latest technology to ensure you can focus on your customer

Locstat provides hybrid, multi-dimensional recommender systems, incorporating graph technology, statistics and Machine Learning (ML) and, excitingly, GraphML. Machine Learning not only increases accuracy, but it enhances the level of nuance for a bespoke customer service. Graph-enhanced ML helps fill in that missing contextual information. We use ML where it is most appropriate to do so, i.e. for churn predictions or upsell / cross-sell recommendations. We have the flexibility to apply different models to suit each enterprise and your specific data structures. So you also experience a tailor made service!

In addition, customer segmentation is part and parcel of our recommender systems. Our flexible segmentation capability allows you to identify customer niches for potential churn or marketing campaigns. Therefore, you can predict and pre-empt churn with appropriate incentives; reward high value customers and target prospective ones for cross-selling and up-selling. You can even fine tune the process by segmenting your segments!

Maximise all of this extra functionality and you will not only have happy customers, you’ll also retain those whose loyalty can be somewhat fickle.

Have you figured out the missing ingredient yet?

A Locstat recommender system