2601 Ocean Park Blvd #104 Santa Monica, CA 90405 | 310-598-6658 | RetentionScience.com

How to keep your holiday customers long after the season is over

#holiday-churn

+ Present:

Matthew Michelson, Ph. D.Director of Data Science

Retention Science

Today’s speakers

Cara KlewinSr. Email Marketing

& CRM ManagerALOHA.com

Jon FoxClient Success Manager

Retention Science

About ALOHA

2015 Holiday season sales are predicted to be as much

as $965 billion, a 4% increase over last year’s

shopping season.

Agenda

1.What is churn?2.Reasons Customer Churn3.Predicting Churn

a) Calculating Churnb) Predictive Models

4. How to Prevent Customer Churn5. Campaigns That Work

Deloitte Report#holiday-churn

What is Churn?

Churn is…

#holiday-churn

When a customer unsubscribes from your service, ceases to purchase from you, or simply stops engaging with your brand.

• Many companies, however, focus on acquisition rather than churn, even though research shows it costs five times as much to acquire a new customer than to keep an existing one.

To take the proactive approach of nurturing customers before they churn to keep them engaged and purchasing, you need to look at why customers churn in the first place.

Why are Customers Churning?

#holiday-churn

1. Poor customer ser-viceOf customers who decide to leave a company, 70% of them to so because of poor service.

How to prevent it:

Though the holidays are a busy time, it’s important to remember to take the time to make customer service a top priority. When customers feel a company really cares about their needs, they are more likely to re-turn the favor.

• Lifecycle Stages Overview

#holiday-churn

2. Not enough valueWhen customers don’t feel they’re getting value from your brand, they’re quick to try another brand.

How to prevent it:

Value is a subjective term for customers, so it’s important to find out what each customer considers

valuable. For example, some customers may find free shipping valuable while others want unique product recommendations.

#holiday-churn

3. Poor quality communica-tionsYou can no longer expect to batch and blast your customers and get solid results. Customers want -- actually demand -- quality communications from brands.

How to prevent it:

Give your communications a pur-pose, make them relevant to the individual and engage your customers in conversations to improve your overall quality.

• Lifecycle Stages Overview

#holiday-churn

4. No brand loyaltyDuring the holiday season, many customers buy from brands they don’t usually purchase from when getting gifts.

How to prevent it:

Give new customers a reason to be loyal to your brand. Create a memorable experience: offer assistance when making first purchases or give incentives for the user to get to know your brand more by following you on social media.

When a customer feels you’ve let them down, they’re quick to head to the door. And with all the online outlets, they’re even quicker to let their networks know about it.

#holiday-churn

5. Unmet expectations

How to prevent it:

Underpromise and overdeliver. Customers are delighted when you exceed their expectations, espe-cially during the hectic holiday season. If you are unable to fulfill a promise, be transparent and remember churn reason #1 – customer service can make all the difference.

Predicting Churn

v

Now that you know why customers churn, it’s time to look at how to predict which of your customers are at risk of

churning or who have already churned.

#holiday-churn

Basic Churn Calculation

You can use Churn Rate to calculate:

• Number of customers lost• Value of recurring business lost• Percentage of recurring revenue

lost #holiday-churn

Churn can be tricky to calculate. This is the most basic calculation:

Using Data Science to Predict Churn

We assign a churn score to each customer that tells us their probability of churning.

Based on scores, users are put into 3 buckets:

#holiday-churn

1. Low churn score = “Ready to Buy”- These customers will make a purchase at some point

2. Medium churn score = “At Risk”- These customers might make a purchase, or might churn

3. High churn score = “Churned”- These customers are likely to not purchase again

Using Data Science to Predict Churn

#holiday-churn

Retention Science updates 100 million users per day to determine where they fall on the churn spectrum.

Markov Churn Model

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Preventing Churn

Tips for Preventing Churn

• Know who your customer is and if they change throughout the year.For example, jewelry companies may target women most of the year, but need

to change their messaging around Valentine’s Day to target men.

• Provide a smooth customer journey from start to finish.Test each stage of the purchasing process yourself to make sure it’s intuitive and

easy to follow.

• Reward your advocates as they are the most valuable customers you’ll have.Advocates promote your brand to their friends, family, and networks – reward

them for providing reviews and getting their friends to become customers.

• Time is of the essence when it comes to recapturing customers.The window to recapture interest is smaller than ever, make sure you have a

reaction strategy in place to address customer actions.

How ALOHA re-engages customers who have

churned after the Holidays

Win-Back Campaigns

A series of marketing messages with the core function of bringing a lapsed customer back into the purchasing cycle.

Two main components:– Messaging that addresses

the reason for lapse– An enticing offer – i.e. a

discount on a future purchase or a free month (if dealing with a subscriber)

Free Shipping or Percentage Off

• Win-Back offer is dynamically inserted into emails

• Customers with highest CFV (Customer Future Value) get best offer

#holiday-churn

Pair Content with Products & Offers

#holiday-churn

Give Customers a Choice

#holiday-churn

Giving customers a choice to discover new products via free samples is a great way to re-en-gage customers for the new year.

Recap

Avoid Churn this Holiday Season:

#holiday-churn

• There are many reasons your customers may churn like poor customer service and not providing enough value.

• Knowing churn rate is useful in calculating the value of recurring business lost

• Data science helps predict churn by calculating churn score and bucketing customers into three categories: Ready to Buy, At Risk, and Churned

• The Markov model is one model Retention Science uses to predict the probability a customer will make another purchase.

• To prevent churn: Know your customer, provide a smooth customer journey, reward your advocates, & timing is everything

• Win-Back campaigns are a great way to re-engage customers who have churned

2601 Ocean Park Blvd #104 Santa Monica, CA 90405 | 310-598-6658 | RetentionScience.com

Questions?

#holiday-churn