A direct-to-consumer food and beverage service suddenly faced unexpected customer churn for its subscription-based beverage program. While churn is easy to observe as a declining number of customers, it can be difficult to identify the causes of churn. This service faced precisely this challenge. In addition, they wanted to predict which customers would likely churn in the future. This task proved an excellent match for Pecan’s predictive analytics platform, with a model built and generating actionable churn predictions in days to empower the team’s rapid response.
Challenge
Customer churn proves tough to address with conventional methods
As a provider of subscription-based beverage plans with globally distributed customers, this company noticed an unexpected rise in subscription churn but couldn’t detect why it was happening. To try to deal with the problem, the company initially engaged in ineffective and generic re-engagement campaigns that didn’t reduce the churn. Even worse, the campaigns’ lack of targeting caused a negative customer experience and yielded poor campaign ROI.
In addition to determining why customers churn and who was likely to churn in the future, the company wanted to effectively target high-risk customers as far as 3 months in advance.
The company’s data was complex, accounting for 48 different beverage lines and multiple data sources, which required a solution that could connect to and combine them all.
Traditional data science techniques might have offered options, but the unexpected increase in churn meant this team needed a quick solution — not the six months to a year it might take a data science team to develop a model by hand.
Solution
Automatically prep and combine diverse data in existing systems
With the Pecan platform, this company automatically connected to and combined data across all the beverage lines and data sources. This data represented marketing campaigns, distribution data, CRM activities, promotions, and more. Pecan’s versatile suite of connectors made it possible to add predictive analytics into their workflows without disruption, integrating rapidly and seamlessly into their existing systems, and working with data no matter its source.
Smashing the timelines of traditional data science
In just days, the client had a fully trained churn prediction model. The model identified which customers were most likely to churn and also allowed the company to pinpoint and prioritize VIP subscribers. In addition, the granular customer-level predictions provided by Pecan offered specific direction for the marketing team to use in outreach to each subscriber.
Proactive strategy with predictions, not retroactive diagnosis with historical data
Pecan’s model enabled the marketing team to develop a preemptive retention strategy by segment, time, and customer value, and feed these predictions directly to their CRM. Instead of waiting to see customers churn and retroactively trying to diagnose the problem, the team could see into their customers’ future. This foresight gave them the opportunity to proactively plan the best way to try to retain those customers likely to end their subscriptions.
Results
85% of churn detected and treated in 1, 3, and 6 month campaigns
Using the Pecan platform, the marketing team identified 85% of customer churn in advance. Armed with that foresight, the marketing team created focused campaigns 1, 3, and 6 months in advance, resulting in vastly improved customer retention and lifetime value.
Overall, the company saw an 11% overall reduction in subscription churn, reducing the surge in churn they were experiencing by 39%. Additionally, among VIP customers, the company lowered the overall churn rate by 20%.
Rapid ROI on Pecan’s churn predictions
This beverage marketing team successfully addressed the mysterious churn problem with proactive campaigns informed by precise predictions. Traditional BI and manual data science methods would have struggled to find a timely, effective solution to this dilemma. Fortunately, Pecan’s platform was ideally suited to quickly identify potential churn and enable future-driven action — keeping their beverage subscriptions and business flowing.
