Predictive Analytics and Customer Segmentation provide you with Insight into Customer Lifetime Value and Propensity to Quit
How much are your customers worth and what is their anticipated lifetime values?
The fact is customer lifetime value is becoming a more commonly-used metric among companies. Of course, a key factor to customer lifetime value is retaining customers and very importantly retaining your high value customers.
Using Predictive Analytics and customer data to segment customers can help a company identify the most profitable customers and enable it to focus its engagement and marketing efforts on those customers that will make the biggest impact on the company’s business.
In the same way as Location, Location, and Location are key in Real Estate, Customer Segmentation is a critical aspect of examining and acting on Customer Lifetime Value. This allows you to focus on those customers with the highest value to your organization.
Companies whose most valuable customers have higher customer lifetime values and also purchase more often can use predictive analytics to determine the type of messaging and offers that will tend to resonate with these customers. In addition, predictive analytics can enable these firms to take the actions that will lead to additional purchases therefore increasing loyalty.
Propensity to Quit is the next step. Once you know the value of a customer it’s important to then identify those customers who have a high value and a high propensity to quit.
Predictive Analytics models provide you with this insight by analyzing all the variables you collect on your customers and through regression analysis determine the variables that have a positive or negative impact on Customer Retention.
Wouldn’t you want to know if any of your high value customers have a high Propensity to Quit and be able to take action to retain them before they leave? Predictive Analytics provide you customer segmentation allowing for Actionable insights.