Churn models are not new in the analytics world, they're heavily used by mobile telcos and other corporations that want to keep their loyal customers happy, and bring back customers from the brink of "about to churn." In some cases, these models will help classify a group of customers that are such a pain in the butt to keep, it's better to let them go.
Makes business sense, right? Keep the best customers happy, group the customers that are about to leave into the ones you can save or not. I can't help but wonder if the ones that you think are better off churning, aren't the ones that are really telling you something valuable about your business. Like my wife.
My wife is one sharp cookie and she can easily ferret out the best deals for our family. It's like a game for her, she wants to spend $1 to get $5 worth of value. Granted, I'm biased, but I consider her one of the ultimate shoppers and she routinely evaluates our monthly subscriptions for something better.
Enter our Cable TV fiasco.
We've had Cable TV, Internet, and VOIP for many years because we can't get any other alternative services in our area. FIOS isn't available and heavy tree cover prevents us from getting DirectTV. When we first got these services 10 years ago, the Cable TV company gave us an introductory rate for about $100/month, and ever year when the deal was about to expire, my wife would call to complain about the cost and then get them extend the offer for another year. If she didn't, our $100/month bill would jump even higher.
Just think about that for a moment. Basic Cable TV, Internet, and VOIP cost us over $100 per month. I consider paying over $100/month for a landline we barely use, basic Cable (no premium channels) and Internet a bit costly.
Then something changed.
The media consumption habits of Ott household have changed over the past few years. We spend more of our time watching Netflix and Amazon Prime, and less time on CBS, NBC, or even Cable TV. We hardly use our landline phone and spend all our time on our mobiles. We just consume our daily information and entertainment via the Internet more than ever.
This led to several conversations with my wife about cutting the Cable TV cord and porting our VOIP to a new provider, but keeping the Internet, because that is truly the nerve center of the Ott household. So right after Christmas, we decided to make a change. We got rid of our VOIP with them and went with an $8/month outfit out of India.
As soon as we switched to a new VOIP provider, we started getting inquiries from the Cable TV company to win us back. We got new offers that would only expire after a time and would mean we'd be on the phone arguing with them in the future. Stop. The. Madness!
When I started penning this article, my wife was on the phone arguing with a customer representative about their service and costs again. We decided to cut the Cable TV cord once and for all and just keep their $60/month Internet service - also very costly if you ask me.
At first they tried to lure her back with more offers but at some point she crossed a threshold, the deals stopped and there was no attempt to keep her. The customer representative did what he had to do and asked her to stay because with of all the great offered packages but she retorted with a single statement that summarizes what true competition and customer service should be, she said: "The packages you offer for the price is not good enough. You need to give me what I want for less, and not at teaser rates."
I don't know a darn thing about the Cable TV's churn model, but I like to believe that my wife is in a special subset of customers that demand good service and cheap prices - at all times! She was probably flagged as one of those pain in the butt customers that you should let go, but in this particular case she's really telling them something valuable. You're fat, lazy, and missing a new trend.