Understanding customer churn

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Great seminar last week by my colleague Bruce Hardie at London Business School on the complications involved in the simple idea of customer churn. Bruce probably knows more than most experts how to extract useful information on the issues from corporate systems. A few key messages I heard …

Bruce feels the word ‘churn’ should only be used for customer relationships based on contracts, e.g. in banking, mobile phones, media subscriptions. It’s not always simple, even then – many people ...

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When is a customer ‘lost’? – Segmenting by activity rate.

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Central to the principles of strategy dynamics is knowing how quickly resources are being won and lost. This is easy enough for most – you know when you close capacity, hire or lose staff, or discontinue products – but can be surprisingly tricky with customers. You would imagine that banks or telecoms firms, for example, know exactly when a customer is lost because that’s when they close their account – not so!

Often, the customer is really lost much earlier, when ...

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