According to loyalty expert Frederick Reichheld, with customer defection rates in double digits across most industries, firms can lose half their customers in five years, leading to a depression of corporate performance by as much as 25–50%.
It is also a well-known fact that it is multiple times more expensive to acquire a new customer than to retain an existing one, and high attrition rates increase replacement costs of existing customers. A good retention strategy creates competitive advantages, provides a boost to employee morale, produces gains in productivity and growth, and reduces cost. The results can be impressive. It has been observed that a 5-percentage point improvement in customer retention can result in a 75% and upwards increase in customer lifetime value across a range of industries.
Churn in the telecom industry has become a serious concern with rising subscriber churn rates in the backdrop of a global trend of declining ARPU (Average Revenue Per User). Use of machine learning for churn prediction has been an area of focus in the mobile telecom industry; however, the application of the same has been less extensive in the area of broadband internet services.