Insights to Action Series [Part 4 – Churn]

Insights to Action Series
[Part 4 – Churn]

By Liz Emery, Senior Director, Product Marketing

Insights to Action Series [Part 4 – Churn]

Welcome back to Affinity’s “Insights to Action” blog series, exploring how to use Consumer Purchase Insights to solve complex business problems. Consumer Purchase Insights provides a complete, granular view of customer and prospect purchase behaviors, across and between brands and categories, to inform a wide array of growth strategies based on deeper audience understanding. This is part 4 of an 8-part series where we dive into different examples of how to gain insights into – who your consumers are, how they spend, and where they buy – to inspire meaningful action. If you want to read about market share, cross shop and new to brand check out the first 3 blogs below.

Part 4: Churn

Churn is defined as the rate at which customers stop purchasing a good and/or service over a given time or simply put, a lost client. As marketers, we are often asked questions about why customers are churning.

What percent of customers churn per month and how much revenue is lost with this churn?
Why are customers no longer shopping at my store/no longer using my product?

What efforts can I implement to reduce churn?
What is causing churn in certain markets vs others?
Are my current marketing efforts decreasing the churn rate?

The answers to these questions matter because losing customers means losing revenue. Churn analysis is vital to revenue growth and protection. Without it, it can be difficult to identify key insights like what customers like or dislike about your goods/services, what is causing customers to leave and/or stay and what you can do to increase retention when they decide to part ways with the brand. Marketers need a way to track the consumer churn rate across their brand and competitive brands in a timely and accurate way to ensure actionable plans can be created quickly.

The Problem

The exact time measurement window for churn will change based on factors like average purchase cycle for that service/product, the general product category and seasonality, to name a few. For fast-moving goods, retailers worry when they have not seen a customer in around 3 months. For longer purchase cycles, it might be 6 months, 12 months, or longer before brands become concerned.

No matter what the definition of churn is at an organization, it’s painful to lose a customer. Lost customers mean lost revenue and profitability. Beyond financial metrics, every lost customer has an impact on brand market perception and future customer acquisition, especially if you do not address the reasons behind it and solicit feedback on “why.”

Using Insights to Create an Action Plan

What if brands and businesses had a way to dashboard the where, when and with whom churn is happening EVERY MONTH. At Affinity Solutions, we help businesses understand and manage their churn.

Using Consumer Purchase Insights, derived from permissioned debit and credit card transaction data, brands can understand their churn rates with customized lookback windows and data segmentation to influence strategies designed to limit churn while increasing retention.

Let’s look at how churn insights can help a QSR brand better understand financial impact and develop data-driven strategies to combat continued loss.

For a large QSR, in the month of February, we saw an 18.9% churn rate across all US locations using a 3-month lookback window. That means that 18.9% of customers who transacted 4-months ago at one of these QSR’s locations did not transact again over the next 3-months. Those churners made up 11% of QSR’s total revenue that month, a significant loss in revenue.

The QSR can drill down churn insights by market and by demographic segments to create actionable plans. If this QSR took a deeper look at churn rate by state and by generational demographics, they would see a 12% churn rate, in the month of February, in the state of Florida with 78% of these churners being from the Boomers age range. By gaining these insights, the QSR can execute a local marketing campaign in Florida targeted at Boomers with focused messaging to win them back, effectively combating the loss in revenue. Without these granular churn insights, it’s hard for the QSR to quickly develop a strategy that works.

In the example we discussed, the analysis illustrates how churn is trending over time for one specific QSR, but this is just the beginning. Churn insights can answer a wide range of questions for brands to protect current revenue/growth. Some examples include:

How does brand A churn compare to other brands in the overall category/by market/by demos?
Are similar “competitive” brands seeing the same trends?

Where are brand churners migrating to and why?

By using churn insights, you can understand what impact a lost customer has on your business’ bottom line and develop meaningful action plans to solve the issues leading to churn. To learn more about Consumer Purchase Insights churn reach out to Sales@affinitysolutions.com.

That wraps up Insights to Action [Part 4 – Churn]! Stay tuned for Insights to Action [Part 5 – Loyalty] where we dive into the value of retaining customers on a company’s success!