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A Practical Guide to Data Mining for Business and Industry by Andrea Ahlemeyer-Stubbe, Shirley Coleman

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11 Miscellaneous

11.1 Recipe 20: To Find Customers Who Will Potentially Churn

Industry: The recipe is relevant to publishers, finance, insurance, software, online services such as premium accounts of social networks and all industries with long-term contracts with clients.

Areas of interest: The recipe is relevant to marketing, sales and management.

Challenge: Some businesses are based on long-term contracts with less interaction between the parties, for example, contracts for most kinds of insurance and telecommunication, licensed software and daily delivered newspapers. In all of these businesses, it is pertinent to keep the customer or client in the system for as long as possible. Every customer that quits a contract too soon is lost money and is difficult to replace by a new one. It is an advantage for the companies to know in advance which customers are likely to quit and to work out ways to avoid it or to lower the probability. When customers quit or change supplier, it is referred to as customer churning (see Figure 11.1 ).

c11-fig-0001

Figure 11.1 Intervention possibilities ...

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