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Maximizing Customer Retention with Causal AI

Retention Optimization: State of Play

The last two years have thrown the digital customer experience into the spotlight. From e-commerce to telecommunications, banking, and the latest subscription-based fitness company, the COVID-19 pandemic has forced everyone to take a hard look at the way their customers engage with their brand. As consumer expectations have changed, customer churn has become a core challenge in the digital world.

However, if marketing leadership is asking why customers churning? They may not be looking at the challenge from the right perspective. Instead, we suggest they ask: Who are the customers that are more likely to stay, and how can we find or foster more of them?

Customer retention is nothing new, but it has always been an area savvy marketers and marketing leaders have looked to for incremental but meaningful optimizations that lead to increased revenue and the maximization of marketing budgets.

A 5% increase in retention can increase profits 25-95%

Two avenues for customer retention strategies

Today, many companies, especially new digital-first businesses, look at retention on a semi-regular basis, when someone asks, or when there is a reaction needed due to changes in the market. These forms of retention center around the customer experience and having a playbook on how to minimize churn at certain situations that arise during the customer lifecycle.

The former is what we would call Proactive Retention. Planning ahead to make sure that everything from UX to communications is aligned best to retain your new and existing customers.

The latter we call Reactive Retention. Understanding what can be done to retain a given customer based on what we know about them and what we think will impact their decision to stay or leave.

The common requirements for success in proactive and reactive retention are:

  • An understanding of what factors impact retention – sentiment, interactions, support calls, payment methods, monthly activity stats, etc – for both individuals and segments
  • The ability to identify groups of customers that are most likely to remain.
  • Planning which treatments are most suitable while understanding the impact of the associated costs – i.e. impact on revenue dilution.

Marketing Retention with Causal AI

Human-aided Causal Discovery

With humans-in-the-loop, domain knowledge isn’t left off the table. Marketers can interact with a visual representation of the model’s causal graph to see which factors affect their target KPI(s) in which ways, and actively add in the constraints and nuances of your domain and the world your customers live in.

Transparent and explainable AI

Mapping the causal drivers of your domain also enables you to get explanations for recommendations and current retention rates.

Traditional ML solutions for retention struggle to avoid biases like age or gender. Get an easy-to-understand readout of potential model bias.

Proactive Retention

Understanding what causes a renewal or a customer to stay, is not necessarily intuitive. Remember most marketers are thinking about how to prevent churn, not why a customer stays.

Causal AI enables the discovery of the causal drivers of retention. Giving you an accurate picture of how the various drivers (factors) are impacting a customer’s decision to stay.

Reactive Retention

Using a causal model of retention we are also able to get a clear picture of what types of treatments will be effective in generating a positive effect in the moment eg. in an inbound call or online chat conversation.

Teams are able to see exactly what treatments can
be used and the information needed to make a decision that
is personalized and effective.

This use case powered by Causal AI goes beyond ML predictions that traditional churn models produce. Causal AI identifies the true drivers of retention: it is uniquely capable
of recommending a set of treatments and suggest optimal allocations of resources and budgets to increase retention, based on business goals and KPIs.

We’ve integrated world-class Causal AI capabilities into our Retention Optimization Decision App. This draws on next-generation explainability, machine imagination, and intervention design. Our partners working on the ground within marketing teams have seen a 4-9% increase in retention above standard machine learning-based churn prevention models with triple-digit ROI results. We’ve rewritten the customer retention playbook.

attribution model