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> Far too often businesses define churn as no purchases after N days; typically N is a multiple of 7 or 30 days I'm working for a strategy consulting firm, adv
by ekingr 9y ago
> Far too often businesses define churn as no purchases after N days; typically N is a multiple of 7 or 30 days
I'm working for a strategy consulting firm, advising large retail clients.
Even though we have looked at doing this kind of advanced modelling for churn metrics, we always end-up using the same kind of very basic rules of customer not purchasing within the last x days.
The reason is twofold: (1) it’s trivially easy to implement and explain, (2) at the end of the day using the complex method is not worth the effort. Because business-wise, there are many other external factors that are much more impactful than the modelling biais – like seasonality, variation by category of product, etc.
It all depends on the decisions those metrics are used for, but most of the time it’s not worth the pain.
- jimnotgym 9y agoThat is really interesting. I am working on this right now. It was an interesting piece but I agree with both of your points. Hopefully you can spend the time you save on more interesting questions like, 'why' and 'how do I affect that number' and 'how do I predict this in advance of spending $ recruiting the customer'. Or the real biggie, 'how can I write this in a way that can be run in 1hr per qtr using only a spreadsheet and costing $10 or less, which seems to be what clients really want.