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Customer lifecycle: Quick-Churn vs. Late-Churn

by on January 20, 2014

Optimove defined customers who churned while they were still “New”as “Quick-Churn” and those customers who churned later, after they had already become “Active” customers as “Late-Churn”.  They built a model around the churn and reactivation data from 30 websites in a variety of verticals over a two-year period. Their mission was to see if there were any significant differences between the 2 groups:

1. Reactivation Rate

Customer Reactivation Rate from Churn

Late-Churn customers were reactivated far more often than Quick-Churn customers (83% more)

2. Churn Duration

Customer Churn Duration

Reengaged customers from both groups spent the same amount of time, on average, in Churn.

3. Survival Rate

Back from Churn Customer Survivability

Late-Churn customers were much more likely to continue to perform transactions beyond the initial reactivation period than Quick-Churn customers (51% more).

4. One-month Reactivation Revenue

There was no statistically significant difference in the average spending levels of the two groups during their first month following reactivation.

Insights and Conclusions

Firstly, our study confirmed that there are significant differences in the Quick-Churn and Late-Churn sub-segments.

Secondly, the results clearly show that Late-Churn customers are much more valuable than Quick-Churn customers. This is both because they are more likely to return and because they tend to remain active customers longer after they return.

Savvy marketers should focus on providing greater incentives to, and invest more resources in, those Late-Churn customers who were once the more active ones. On the other hand, to win back the Quick-Churn customers, creativity and experimentation are the name of the game.

From → LTV, Retention

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