SPC with Applications to Churn Management

摘要

The process of a customer replacing one provider of a service or merchandise for another is called a churn. In competitive business environments, such as telecommunications, insurance, banking, hotels and mail order, customers can easily leave one company—and they really do. Since the cost of recruiting new customers is higher than the cost of retaining them, it is crucial for companies in these trades to monitor their customer population in order to keep churn rates low. Statistical process control (SPC) methods are developed to cover the needs of monitoring industrial processes and intensive care patients. They are based on procedures where data are analysed automatically and on-line. When results indicate that the process is out of control, an alarm alerts an engineer or physician, who can take corrective action in order to get the process back under control. This paper discusses the use of SPC methods as a means to enhance precision in detecting increasing churn rates. We show that SPC methods can give market analysts a powerful tool for tracking customer movements and churn. An early warning system (EWS), based on the same ideas as used in process industries, will give foresight and a longer time to react against churn, hence providing an advantage over competitors. In the examples discussed in this paper we monitor usage in order to detect decreasing volumes that indicate churn. Data were extracted from internal databases, and analysed and reported on-line. We conclude that the potential improvement by using SPC methods in churn management is high.