Customer Attrition - Research On Customer Attrition

Research On Customer Attrition

Scholars have studied customer attrition at European financial services companies, and investigated the predictors of churn and how the use of customer relationship management (CRM) approaches can impact churn rates. Several studies combine several different types of predictors to develop a churn model. This model can take demographic characteristics, environmental changes, and other factors into account.

Research on customer attrition data modeling may provide businesses with several tools for enhancing customer retention. Using data mining and software, one may apply statistical methods to develop nonlinear attrition causation models. One researcher notes that "...retaining existing customers is more profitable than acquiring new customers due primarily to savings on acquisition costs, the higher volume of service consumption, and customer referrals." The argument is that to build an "...effective customer retention program," managers have to come to an understanding of "...why customers leave" and "...identify the customers with high risk of leaving" by accurately predicting customer attrition.