Reducing Customer Churn

About the Company Problem Statement

• Market leader • Customer churn - switching to
PRE-CHURN Poorly set expectations during the sale process
competition
• Steady business - solid CAGR 15%
• Declining service levels Interaction that build frustration
• Robust Supply Network – 1 Plant & 4 DCs ROOT CAUSES
• Space challenges at Factory
• Complex RM footprint - 90% Global TIPPING POINT One or more event that disposes a customer to churn
sourcing • Decline in Innovation Success
rate FINAL TRIGGER Event that trigger the decision to defect
• Wide product portfolio(200+)
• Pipeline of innovation across the board POST CHURN customers more or less likely to return
• Misconception 1: Poor service level is causing churn
Reality: Churn results from a series of episodes over time
Step by step approach for Business Leaders Remedy: Focus on the entire customer journey, not the latest episode
• Misconception 2: Intervention at any point can save the day
Misconceptions & their remedies to reduce Customer Reality: It’s more costly and less effective to intervene later
Churn Remedy: Excel at a few interactions from the start in order to build equity with the
1
customer
• Misconception 3: One silver bullet will stop churn
Improve service level by modifying supply chain Reality: Churn will not succumb to a single initiative, because churn takes different paths and
2 segmentation & improving forecast accuracy each path stems from several root causes
Remedy: Focus on the subset of root causes that have the greatest effect
Tackle the space shortage at factory by appropriate • Misconception 4: Satisfying customers is good enough
inventory classification, use of effective KPIs & Deep Reality: Customers who call themselves satisfied may be passive and easily wooed by
3 Rack system competitors
Remedy: Earn customers’ active advocacy by delighting them at key moments
Improving the success rate of innovation by removing the • Misconception 5: Success hinges on installing the right technology and processes
silo thinking among various departments i.e. Open Reality: Having the right technology & processes are important, but great service also
4 Innovation requires employees with a customer-centered mindset and the latitude to act
Remedy: Give employees the tools and incentives they need to rapidly address customer
feedback
KPI ?
1. Consumer Retention Rate – Measures Repeat business and Customer Loyalty
2. Customer Churn Rate – Rate at which your customer stop buying your products
 Improving Service Level Tackling space shortage at Factory
• To improve service level, we must : • Space shortage at factory can be handled by :
1. Perform Supply chain segmentation (Product-wise) 1. Appropriate Inventory classification
2. Reduce forecasting error  FSN (Fast, Slow & non-moving) inventory classification to be used
3. Calculating Safety Stock (Considering demand and lead time variation)  Efficient to find dead stock and reduce its accumulation in the inventory
1-Deep in use in
• Supply chain segmentation Normal Condition
 Here there are 4 types of products : 2. Use of latest KPI to identify slow-moving inventory
3. Core SKUs (Low demand uncertainty)
1. Common products (70%, low margin) 4. Innovative (High demand uncertainty)  Inventory turnover & Inventory sell-through are basic KPIs & insufficient
2. Speciality products (20%, high margin)  E.g. 3 dimensional metric to identify slow-moving
 inventory developed by G Chodak
HIGH

(SWi, d1i, KoPi) 2-Deeps in use in

Pull Pure Pull Supply Chain (Build-to-Order) Push-Pull Supply Chain emergency
DEMAND UNCERTAINTY

 Speciality & Innovative  Common & Innovative 3. Use of Deep Racking system to efficiently use the available space
 Use 1-Deep in use in Normal Condition
 Use 2-Deeps in use in emergency
Push-Pull Supply Chain Pure Push Supply Chain (Build-to-Stock)

 Speciality & Core SKUs  Common & Core SKUs Logistic Strategy
• Cross docking for common and core Sku reducing storage at DC
Push • For Pure pull responsiveness is critical so carrier delivery to be implemented
LOW

• RM Sourcing to be Ocean mode for Pure Push and for Pure pull air carrier to be used
LOW Pull ECONOMIES OF SCALE Push HIGH
• Reducing forecast error
 For core SKUS, traditional forecasting techniques are sufficient
Improving Innovation Success Rate
 For Innovative new products, AI/ML based forecasting required, which shall be
accomplished in two stages: • To achieve success in innovation:
1. Clustering technique to classify the new product into some category  Innovation must be centralized
2. Regression method to compute the forecast  Each department of the organization must jointly involve
• Calculating Safety Stock  Silo thinking would eventually lead to failure in success of new products

• Open Innovation would solve the decentralization problem by

Service Level KPI –  connecting the numerous business units across geographies
OTIF (On Time In Full) – Shows that the company was able to deliver the full  leveraging from the sharing of knowledge and the ability to cooperate across divisions
quantity requested by the customer on the requested date the latest