Objective: Calculating CLV, churn and retention
Research question: What are the lifetime values, churn and retention rates of different segments of online subscribers?
Abstract: Across three broad value-based segments it was attempted to ascertain a number of outcomes such as churn rate, defection rate and customer lifetime value (CLV) for a web hosting provider. The model employed was the General Retention Model (GRM) which expands the Simple Retention Model (SRM) and allows for time-varying retention rates and cash flows, as well as cash flows that are dependent on the time of cancellation.
Further Info
Customer lifetime value (CLV) calculation attempts to determine the revenue that a customer is expected to produce for a business during their lifetime as a paying customer. This can enable the business to make decisions about products or services, and how much money to invest into marketing, acquisition and retention. It also offers a better understanding of high churn activity, customer lifecycle and profits generated by individual segments. A number of KPIs can be derived from such an analysis, such as retention rate and time before churn. The brief for this project was to calculate CLV for each segment, ascertain certain patterns from a dataset, such as retention rates with segments, and if it were possible to predict churn times.