Challenges With Churn

Six Sigma Forum Magazine vol. 11 issue 1 - November 2011

Abstract: For noncontractual businesses, identifying profitable customers before they take their business elsewhere is important but difficult. These businesses usually have limited information about when these customers churn. Taking a control chart approach similar to statistical process control (SPC) can help develop churn predictive models and identify early churn. The first challenge is to develop an operational definition of churn. This case study uses control charts to define churn for a sample business, resulting in a decision rule that can serve as the basis for operational definitions in other research.

Keywords: Case study; Control charts; Customer retention; Statistical process control (SPC)

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