Subscription Based Services

Duration of Customer Retention Within Subscription-Based Services

The present is a method used to predict the future behaviour of the client based on the past behaviour of the client. It is designed to identify and analyze how recently each Client interacted actively with the Business. If freshness is measured with a properly selected metric, this can be a very powerful predictor of the client’s future behaviour. In fact, in practice, it has repeatedly been argued that freshness is the strongest predictor of the future behaviour of customers among the three factors of the RFM analysis: freshness, frequency and monetary indicators.

Therefore, a recent analysis can provide substantial commercial value if done successfully.

The general method of analyzing the latest events must be adapted to the different contexts of each business: the unique life cycle of the client, the type of product. In this article, we will see the important case of subscription (or continuity) of services. Such services require constant use by the Client, often on the basis of a contract. Typical examples are bank accounts, credit cards, fixed and mobile services. These services are offered in highly competitive markets characterized by high rates of customer change (exhaustion or loss of customers), which reduce the profitability of those who suffer from it.

The selection of appropriate measures for the present is not obvious in the case of continuity services. A bank account or test mobilabonnement is potentially used every day, so the “last use” cannot usually be the basis for measuring the news. The fact that the service is used does not reflect the active choice of the Client for interaction with the Business. Therefore, you should try to identify those events that reflect the “active choice of the Client to interact with the Business”. In addition, these events should be divided into events that reflect a positive attitude of the Client towards the business and a predisposition to strengthen relations with the Business (for example, improving the quality of service), and events that reflect the increasingly negative attitude of the Customer. Client to the business (increase in Customer friction) and predisposition. To unsubscribe.

frequency and monetary indicators

Events that indicate a positive attitude:

About the order in general

  • Additional order, the creation of a subscription portfolio (research in the banking sector showed that customers with a large product portfolio tend to be more loyal than customers with a smaller one)
  • Update of the service (for example, change to a fixed monthly rate higher in mobile telephony)
  • Order to improve the service using the service function not previously used
  • Registration in the web channel offered by the service or accepting a campaign offer
  • Cancel a product, reducing the size of a subscription portfolio or termination of the subscription portfolio.

These two categories of events “reduced” and “increased” “customer friction” should be considered separately, as they have the opposite effect. They should not be used in the same metric since they can cancel each other.

In addition, choosing an appropriate division of time in time-out periods can affect the efficiency of forecasts. These periods of time are related to the life cycle of the client of each type of product.

In summary

Recent alternative scores can be tested to determine their effectiveness with a test campaign. The best measure is the one that provides the best prediction of the speed of response. In addition, this metric should provide a significant differentiation in response rates between quintiles, especially in the most recent quintiles.