Taking Flight through Increased Customer Retention

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A mid-tier destination airline sought to drive revenue growth by better activating their customer base and reducing customer attrition. The airline recognized attrition as a critical lever for their growth and was experiencing attrition rates of nearly 60%. Retaining customers was paramount for achieving strategic business objectives, considering that customers were only able to book travel on the company website, and not using third-party outlets.

Objective:

Develop a predictive model that will enable the airline to grow their customer base by:

  • Reducing revenue leakage resulting from customer attrition
  • Illustrating how attrition varies by customer category (new vs. returning vs. win-backs)
  • Proactively communicating with customers at-risk of attrition

 

Approach:

Build a Predictive Analytics Attrition Model that:

  • Identifies customer characteristics that explain attrition likelihood
  • Scores customers’ likelihood to attrite within the subsequent year

 

Outcome

Working with the client, Inspired Intellect:

  • Advised complementing the predictive model with predictive retention and conditional spend
  • Suggested overlaying demographic data to provide visibility to customer personas and design personalized offers / targeted communications to at-risk customers
  • Advocated data management initiatives to permit employing other internal assets to enhance the model’s predictive power

 

Impacts:

  • Identified leading indicators of customer attrition – inclusive of actionable business rules logic that could be leveraged ahead of full model operationalization
  • Established ~$70.5M in incremental revenue retention opportunity (over the business as usual/random model)
  • Corroborated the predictive value of the airline’s internal and external data sources to refine the roadmap and next steps
  • Applied model outcome to hedge on fuel and other capacity planning efforts