CASE STUDY

Reducing Customer Attrition with Predictive Analytics

Industry

Retail (E-commerce) 

Ecosystem

SAP, Oracle

Metrics

    Reduced Churn Rate, Increased Customer Retention, Actionable Insights 

    Business Challenge 

    A growing e-commerce business faced challenges with customer retention. While acquiring new customers, they experienced a concerning rate of existing customers discontinuing their purchases and engagement. The business lacked a systematic way to proactively identify customers likely to churn before they stop purchasing, understand the key factors and behavioral trends driving customer attrition, implement targeted retention strategies effectively due to uncertainty about who to target and why and leverage customer data for predictive modeling without dedicated data science resources or extensive coding capabilities. 

    The organization needed a solution to analyze its customer data, predict potential churn, and gain actionable insights to improve retention and sustain long-term profitability. 

    Solution Implemented 

    The e-commerce business adopted the Karolium “out-of-the-box” predictive solution readily fit for their business circumstances. The process involved: 

    • Flexible Data Integration: Historical customer data (including demographics, purchase history, engagement metrics) was easily uploaded into the environment using direct file uploads. Options for schema selection or dynamic queries were also available for more complex integrations. 
    • Guided Data Preparation & Analysis: Performed essential data treatment, including handling missing values (imputing with mean/mode) and normalization, ensuring data quality for modeling. Leveraged built-in Exploratory Data Analysis (EDA) tools to visualize data distributions (box plots) and understand relationships between features and churn likelihood (feature correlation graphs, pair plots) without manual scripting. 
    • Zero Code Predictive Modeling: Using the intuitive Karolium interface, the business optimized ‘Churn Status’ as the target variable, relevant customer features identified during EDA as predictors, using machine learning model training and classification algorithms available within the platform and identified the best-performing based on F1 score, for both precision and recall in identifying churners. 
    • Automated Prediction Execution: Once the optimal model was trained and selected within Karolium, the business could upload new customer data batches. The platform automatically applied the trained model to generate churn probability scores for these customers, highlighting those at highest risk enabling the customer team to run effective campaigns. 

    Business Outcome 

    By implementing the Karolium zero-code churn prediction solution, the e-commerce business gained significant advantages, turning customer retention into a data-driven strategy: 

    • Proactive Churn Identification: The business transitioned from reactive measures to proactively identifying customers with a high probability of churning, allowing for timely intervention.  
    • Actionable Insights: Analysis within Karolium and model results helped pinpoint key drivers of churn (e.g., decreased purchase frequency, lack of engagement with specific features, tenure duration), providing a clear understanding of why customers were leaving. 
    • Targeted Retention Campaigns: Armed with predictive scores and insights, the marketing and customer success teams could focus retention efforts (special offers, personalized outreach, support check-ins) on the most vulnerable and valuable customer segments, optimizing resource allocation. 
    • Reduced Churn Rate: Proactive and targeted interventions led to a measurable decrease in the overall customer churn rate upto 70%. 
    • Increased Customer Retention & LTV: By successfully retaining more customers, the business directly improved customer lifetime value and secured future revenue streams.  
    • Democratized Data Science: Achieved sophisticated predictive analytics capabilities without needing dedicated data scientists or complex coding, empowering the business team to leverage their data effectively. 

    Conclusion

    Having experienced the platform’s capabilities firsthand and recognizing its tangible value, the customer developed significant confidence, prompting them to proactively undertake a strategic review across various business functions to identify further high-impact opportunities for AI-driven enhancements and optimization. 

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