The retailer has easily doubled this sale. An additional element of maximizing customer profitability is identifying not only good but also bad customers. Analytics can help here as well. For instance, using data from past interactions, companies can use analytic techniques such as logistic regression to build a model that predicts fraud, and thus avoid losses even before they occur. Retaining good customers.
Studies show that keeping current customers costs five to seven times less than finding new ones.
Many of today's industries experience high customer turnover, which costs them millions of dollars per year in potential revenues. For instance, it is typical for telecom companies to experience 30 percent turnover in one year. This means that a telecom company might have to attract an entirely new customer base every four years. By analyzing customers who have left in the past, companies can develop models to predict which customers are likely to leave and when. Such models can also help a company determine which customers generate the most profits and therefore will cost the company more if they leave.