Travis Perkins used AI and Predictive Analytics to reduce Customer Churn by 54 per cent and increase VIPs by 65 per cent
How can I reduce Customer Churn?
The clues to your customer’s next move exists in the data. From the prospects likely to purchase, or the customers at risk of lapsing, RedEye is using Artificial Intelligence and Predictive Analytics to successfully identify key ‘next likely actions’. By doing this we put the power back in the marketer’s hands by giving you the opportunity to influence those outcomes.
Using its proprietary Customer Data Platform, RedEye has built a Predictive Model that works on top of Travis Perkins’ database. Travis Perkins is a British builders’ merchant and home improvement retailer based in Northampton. This Model analyses all customer behaviour, from past transactions to website engagement even within the last hour, to understand patterns of behaviour.
The Churn Model, used in this case, identified Travis Perkins customers whose behaviours indicated that they were likely to churn. This gave Travis Perkins the opportunity to use multi-channel communications to re-engage those customers before they were gone for good. Additionally, the VIP Model, searched for patterns of behaviour that reflected the behaviour of current VIPs. This identified Travis Perkins customers who were likely to become a VIP customer. This gave Travis Perkins the opportunity to use engage and encourage them to join this incredibly value customer segment.
Machine learning comes into play to ensure those algorithms are constantly honed and tweaked to provide ever more accurate insight and models specifically in step with your brand
For Travis Perkins, and for your brand, reducing customer churn and increasing VIPs means increased engagement and increased spend. With an overall reduction in the Travis Perkins lapsed segment of 3.9 per cent and an overall increase in the VIP segment of 5.3 per cent, imagine the increase in spend that could be achieved for your brand.
In our fully integrated platform, Artificial Intelligence then allowed for the delivery of highly personalised messages to be sent to every individual on the Travis Perkins database, according to that prospect or customer’s individual behaviour.
Every customer receives a message specific to their stage in the customer lifecycle.
The impact of Customer Churn and the Benefits of Growing your VIP Pot.
The nature of the customer lifecycle means that reducing the rate of customer churn and growing the proportion of VIPs are some of the ways that an organisation can improve lifetime value. For Travis Perkins the use of the Churn Model drove an increase in customer lifetime value of 34 per cent in a single 12-month period.
Reducing customer churn is one of the most profitable activities a marketer can employ. It is far more expensive to acquire a new customer than to retain an existing one. Any reduction of the lapsed segment is a direct increase on the active segment, allowing marketers to turn more customers into profit. And the VIP segment has the highest lifetime value when compared to any other customer segment. Expanding this group not only means increased revenue, but also strengthens your customer retention and engagement. VIPs represent the epitome of loyal customers and are key brand advocates, the most persuasive way to market your brand and engage new customers.
At RedEye, we have been working on implementing Predictive Models on the Travis Perkins database for over a year now. Together with RedEye, Travis Perkins have progressed from trying to understand what marketing messages will work best to re-engage lapsing customers, to automatically targeting predictive segments with their latest products and offers.
Reducing the churn rate of the Travis Perkins database and increasing the proportion of VIPs in the Travis Perkins database are just some of the ways of increasing customer lifetime value – and they are clearly effective methods at that!
By reducing churn and increasing VIPs over the last eight months, the overall value of the Travis Perkins database has grown by over 86 per cent, leading to an increase of nearly 90 per cent in the segment of active contacts. With those customers identified as likely VIPs seeing an increase in lifetime value of 198 per cent. By identifying those customers likely to become a VIP and marketing specifically to them, Travis Perkins saw those customers increase their average spend by £194 per customer.
Imagine the potential for your marketing with an increase of 90 per cent in active contacts. And what’s more, VIPs are the most valuable customer group you have. What would it mean to you to increase this group by 65 per cent?
Discover more about Predictive Analytics here.