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
