What we know:Loyalty and Retention

Loyalty is earned not in good times when everything works, but when customers run into issues. Hence, the loyalty of customers is equal to your operational efficiency. Do you run your services without errors, can clients depend on you in times when things get tough? Can you resolve the issue quickly and painlessly? If you can answer yes, don’t worry about loyalty – you’ve earned it already.


If your operational efficiency is low, no number and size of discounts on books, shoes, or other non-essentials will turn the customer around and make them loyal.


Moreover, do you know which customers are worth fight for? Is the client with high deposits but no asset product worth all the back-office costs? Alternatively, the free-ride credit card customers, do they transact enough to compensate for the losses? Alternatively, the client, who although gives you high turnover, but at low margins requires a small number of products delivered in several places, erasing the margin in operational costs?


Thanks to our focus on behavioral segments and profitability, models tend to show logical, but surprising facts about who should be saved and who should not. The following is one example.


Loyalty and Retention Principles


CHURN PREDICTION | Based on Behavioral Segments, Predict Churners and Create Mitigation Actions

Our client, a major telecommunication provider in the Czech Republic struggled with churn. Clients were seemingly leaving to other operators.


First, we analyzed the situation for prepaid and postpaid segments. Second, we looked at the usage of the phone and services and created alike groups and their profitability. Third, analyzed the most significant indicators to create probability models. The profitability and probability models were combined to give the sense of the potential loss and hence, priority.


There were few surprises in the analyses - one was that after we combined profitability and probability, there were segments not worth saving (not profitable). Second, some volatile segments were sensitive to price and came and went from the portfolio on a 12-month basis – again not a segment to spend money on.


However, with the remaining portfolio, we were able to differentiate north of one million EUR per year on clients who did not leave the telecommunication provider. Giving ROI >10.

For more on our competencies in the areas of Customer Value Management and how we can help you, please contact: Tomas Wolf, our Subject Matter Expert and Engagement Manager.