Identifying profitable churners and making them stay longer on the database potentially increasing profitability for the company. Latent Gold for Segmentation and SAS for Survival Analysis.

1. 1
The Hotline Churn
Sandeep Eyyuni

2. What are we going to do about Churn!
2
Identify
Evaluate
Measure Model
Which of my customers
are churning
Are they newly acquired/
Profitable/ Old Customers
What is the magnitude of
attrition and how does it
benchmark
What is the financial impact/ lost
opportunity and what is its impact
on business
How is churn
trending?
How can we have
customers longer on
the database and
reduce the chances
of churn.

3. Customer Summary
3
• Cost to acquire a new customer is 5-6X more than retaining an existing one
• Top 20% of the customers contribute to 100-150% of the company profits and 10-20%
will churn annually
• High Attrition will impact the company’s growth and relying on new customers is not a
sustainable strategy
• Potential attributes that contribute to churn are – Age, housing income, location, how
frequently are they using the service, the amount of money that the customer generate,
how reasonable tariffs are compared to the competitor, etc.
• Do not waste market spend on customers who will not churn
• High quality products and services are less likely to result in churn
• Long term customers are more valuable and are very less likely to churn

4. Churn is Good
4
0.00%
1.00%
2.00%
3.00%
4.00%
0 2 4 6 8 10 12
ChurnRate
Q1'13 - Q2'15
Average monthly churn rate for wireless carriers in the
United States
Verizon
Wireless
AT&T Sprint T-Mobile USA
Customers
Profitability
High Medium Low
P(Churn)
High A A C
Medium B B C
Low B C C
 A – Maximize market spend – Maximize ROI – Maximum focus
on retaining these customers
 B – Optimize market spend, drive migration, develop market
actions that will cause these customers to move to the most
profitable segment
 C – Limit market spend
• The average monthly churn rate
for top wireless carriers in the
United States from the first
quarter of 2013 to the third
quarter of 2015.
• The objective is to retain only the
profitable customers falling in
categories A and B to decrease the
market spend and thus increasing
the profits.

5. #HowisChurnTrending
5
Cluster 3
17%
Cluster 2
33%
Cluster 1
50%
Cluster Proportions
9030.599483
3109.93551
7421.342056
0
2000
4000
6000
8000
10000
0 50 100 150 200
Revenue
Tenure in Months
Tenure vs Life Time Revenue
50.88 49.12
36.63
63.37
47.73
52.27
0
10
20
30
40
50
60
70
Clus1 Clus2 Clus3
Percentage churn across 3 clusters  Cluster 2 customers fall under category C, they
are relatively new and we should limit the
market spend on this Cluster
 For Clusters 1 and 3, we focus on maximizing
and optimizing the market spend by retaining
them and offering loyalty benefits so that they
either don’t churn or don’t move to the lower
segment
 From Clusters 1-3, we will identify top 10-15%
customers who fall under categories A and B
and prevent them from churning

6. Show me the Money
6
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1 2 3
Revenue Gain
Old Rev New Rev
• As expected, though there are more
customers in cluster 2, the relative gain is
substantially low and that the chances that a
customer will not churn are not high
• Overall average revenue generated by new
customers who are churning is
$2104.29,which is over $1000 less than the
least contributing segment, limit market
spend
Average
TTE
Average
Revenue
Average
active
phone
lines
Revenue
Reduced
TTE
New TTE
New
Revenue
Revenue
Change
Cluster 1
56.995 47.995 1.45 3966.439 72.01 129.005 8977.813 5011.374
Cluster 2
41.77 46.63 1.22 2376.237 26.69 68.46 3894.594 1518.357
Cluster 3
53.6 47.6 1.46 3724.986 66.42 120.02 8340.91 3741.552
• Only 1216 profit generating
Customers who fall in
category A or B and TTE
range of 40-65 have been
considered. Most of these
Customers are either in
Cluster 1 or Cluster 3
• We let most of the
Customers in Cluster 2 Churn

7. How are we reducing Churn?
7
• Churning broadband customers lost to the competitor, indicating a massive improvement in quality/service
• Approximately 10% of the customers are churning due to dissatisfaction
• More than 60% of the churners are non white indicating that the company introduce few international
plans
• High level of call quality is less likely to result in churn
• Long term customers are more valuable and are very less likely to churn
• Satisfied customers will bring more customers – 0 Market Spend
• Higher the number of customers, higher is the profit
• Offer loyalty benefits to retain existing customers
• New customers will bring in additional costs like set up, market spend etc.
• If we predict customers in the top bracket as potential churners, we can offer them a bonus of $X if they
recharge with $Y and have the validity for a month. Revenue is the credit they generate – the bonus that
we offer. This will also keep them longer on the database and reduce the chances of churn
• Models for the prepaid customers will be different. We will consider the prepaid customers to churn if they
go on to a certain period without recharge or many days without any incoming or outgoing calls