Customer Satisfaction and Retention- Business Intelligence  

Customer Retention and Satisfaction

Given high customer acquisition cost, its must to retain and keep existing customers satisfied.

Customer Satisfaction and Retention- Business Intelligence

You can do analysis to define the focus areas for Customer Satisfaction and Retention.

Key Performance Indicators:

  • Customer satisfaction score
  • Customer rate of attrition
  • %age of customer repeating purchase
  • %age of customer with declining and increasing relationship value
  • Velocity of customer repeat purchase (how often a customer is repeating the purchase)

Foundation Measures/Facts:

  • Cost of Customer Attrition
  • Sales Revenue
  • Sales Transactions
  • customer Satisfaction Score
  • Number of Customers
  • Customer tenure (number of periods)
  • Tenure since last transaction
  • Tenure between two transactions

Customer Satisfaction Dimensions/Attributes

  • CSR for a certain Product
  • CSR for customers belonging to a given Location
  • Channel
  • Customer
  • CSR movement over time
  • CSR cut as per Customer Tenure band
  • Tenure band since last transaction
  • Average tenure band between two transactions
  • Customer Satisfaction Parameters
  • Customer Satisfaction score band


Customer Satisfaction and Customer Retention trends by product-segment, customer-segment and channel.

You may need different set of solutions for different reasons of customer satisfaction/attrition. For example- You may like to focus more on the CSR for customer buying a high margin product, OR for high potential customers.

Customer satisfaction scores to customer retention trends.

Contrary to popular belief, the customer satisfaction is not linearly proportional to the customer retention OR customer value. This analysis helps in focusing on areas of customer satisfaction which have a greater impact. For example, you may not get a decent return on your investments in CS&R for products which are highly competitive, vis-a-vis the ones which are less competitive.

Customer attrition cost analysis.

Customer attrition cost is generally not measured on total cost basis (because the total customer acquisition cost has a fluid definition). You can have a relatively simple definition of customer attrition, as you need it for measuring customer attrition impact, and not for your financial accounting. This customer attrition cost analysis is used to create a business case for CS and R initiatives.

Few considerations as you calculate your customer attrition cost for building a business case:

  • You cannot retain all the customers- Some customers will attrite irrespective. Your CS and R investments will be able to retain only a proportion of the attriting customers.
  • Be cautious of calculating the lifetime customer value loss linked to attrition- Lifetime customer value is a matter of interpretation. One needs to give more weight to the current value.

Pareto on reasons for customer dissatisfaction and attrition:

This analysis tell on how well we have been able to address the top 3-5 issues linked to the subject. We will have a separate topic on this subject.

Business Modeling/Data Mining

(We will be adding a data mining section by June 2008, and that will provide a greater perspective on this subject)

  • What kind customer behaviors indicate that customer is on attrition path?

One can look at how the customer attrition behavior is co-related with his purchase patterns, satisfaction scores, customer segment. Once you have a model, you can try to identify specific customers, customer segments, product-segments, locations and channels etc. where customers have a higher risk of attriting.

  • What kind of delivery, sales process and product features are leading to customer dissatisfaction, attrition?

This helps you to do a root cause on the reasons for customer dissatisfaction and attrition. For example, you may find from customer satisfaction survey that the 3rd party product servicing is not working well, whereas customers are satisfied with your owned service centres.