Challenges and Opportunities
Customer attrition or churn is a rate that measures the number of clients whose business is lost over a particular timeframe. In highly competitive industries where substitute products or services are readily available and the cost of retaining an existing customer is significantly lower than the cost of acquiring a new one, reducing customer churn is the key to long-term profitability. Customer segmentation—dividing a customer base into geographic, demographic, behavioral, and income categories so as to more effectively target products and services—is the key to reducing customer churn. The better segmented your customer data, the more efficiently you can invest scarce resources in those consumers who are most likely to respond to your offerings and the more able you will be to iteratively refine your products and services so as to retain their loyalty.