Retail Energy Provider

Reference Case: A Retail Energy Provider

Identifying optimal target customers for maximum life-time value

Background

The electricity reseller wanted to grow quickly and was successful in attracting new customers with competitive pricing.

However, the company was suffering from high churn rates and wanted to know how to reduce them.

Our Solution

Identification of key factors driving churn and recommendations to reduce it

Analysis of key factors driving churn in various customer segments – it was found out that the company was signing up many customers for whom its service promise was not relevant and who would not renew their contracts
Study of profitability of each segment
Proposal to focus the customer acquisition only on the selected customers which the company would be able to retain due to its brand and service promise and thus to attract higher customer life to value

Outcome

Based on the findings, the company has rewritten its strategy and refocused its sales to the customers segments which are a better match to the brand promise.
Although the customers sign-ups slowed down, the retention and profitability improved greatly.