A Note from Bob Terzotis…
Understanding The Value and Ease of Churn Modeling
Mather: Data Uncorked
June 2, 2022
One thing every winery knows about their DTC business is that they must grow wine club members, protect current members, and sell more wine via e-commerce. Those are daily activities, and they take time. Typically, this is time from someone wearing multiple hats, like a GM, Tasting Room Manager, Marketing Director, or even the CFO or Owner. Mather Economics has the data analytics and revenue management expertise to help.
Those important efforts usually entail pulling reports from your fulfillment platform, organizing, and extracting insights from them, as time allows, and then trying to decide what you should do. Perhaps you’ve been doing the same campaigns for years or no campaigns at all. We know from experience that data talks, your results can be better, and that’s what we’re here to do for you.
Wouldn’t it be great if you had a deeper understanding of the variables driving churn for your winery? Instead of looking at the industry as a whole or using benchmarks, you should use statistical models based on years of your own data. Looking at factors like whether someone has purchased merchandise in the past or if their spending has slowed down in the last month, you can determine whether club members are likely to cancel.
Wouldn’t it be great if you could export a prebuilt or customized micro campaign to send to your most at-risk club members in a matter of seconds? This is what we do. Our analytics platform allows you to see all of your club members ranked on their likelihood of cancellation based on their characteristics and behavior up until that day. By clicking a button, you can move straight to the incentive testing and “saving members” phase, instead of having to drudge through reports and hope what you’re doing to keep people around is going to work.
Mather’s “Step-by-Step Guide to Minimizing Churn” can help you navigate our churn model in four simple steps.
A Guide to Utilizing Mather’s Churn Model
1. Understanding the drivers of churn
A single wine club member can bring in anywhere from $750-$2,000 annually, if not more, meaning that club member churn costs your winery money.
Mather Economics does all of the heavy lifting to pull your historical transactional data, before cleaning it, validating it, and building a predictive model that will tell you exactly why your members are canceling. Outlined in the screenshot below is “the model”, or how certain variables impact the likelihood that someone will cancel.
We don’t use a black-box approach, so the variables in your model are telling you what your data is saying.
Our data team works hard to build models that do the best job of predicting who is likely to cancel using everything from macroeconomic indicators to whether someone has ever bought a non-alcoholic drink at the winery.
For this sample winery, if a member has ever bought merchandise or made a purchase before becoming a member, their probability of canceling is lower than someone who didn’t. If they live within 20 miles of the winery, their probability of canceling is higher.
While these reasons for potential churn might seem intuitive to you, sometimes the data tells a different story, and in the end, you should be thinking about a club member’s profile as a whole, not just through one variable. We look at a club member’s behavior up until today, run them through the model, and score them on their likelihood of cancelling based on their mixed bag of characteristics, which we then give to you.
2. Campaign building made easy
Developing campaigns for churn (or acquisition) is different for every winery.
Mather Economics’ analytics platform gives you the model along with the club members churn scores and contact information in case you want to focus on the people most likely to churn. However, we also create customizable, pre-built segments that allow you to do more targeted campaigns to a subset of club members that are important to you.
The screenshots below show some of the segments this sample winery wanted, from knowing who their high spend/high churn members were to knowing who is disengaging.
3. Test, test, test…
Would you rather spend time being creative and deciding what to test based on your knowledge of your wine operation or spending time gathering reports and trying to find what will move the needle?
As we work with wineries across the country to test and refine campaigns, we are able to advise on what touchpoints or incentives might get you the biggest lift.
Working with you to refine your tests and understanding the results in your own market is when the fun really starts.
Below is an example of how one client tested a number of tactics against a ‘did not receive’ group and measured the results. Over a year, they saw a 38% lift in membership churn. This is just one of a number of approaches, but the best part of the process is that the data is there and our team can help you understand the different tactics to test.
4. Customize your data to address unique challenges
While our analytics platform is extremely useful, we are also here to serve as a strategic partner for your winery. Since we have a large, clean database, we’re able to field any ad-hoc questions that are top of mind.
In the example below, see a statistical model Mather Economics built to show which members were most likely to participate in an upcoming release. After back-testing the model, we found that 100% of the customers predicted most likely to engage in the last club release (scores 70-100) actually did. This allowed the client to laser-focus their engagement communications to those members least likely to participate in the upcoming release.
Mather Economics value proposition
Here are just a few key elements of why working with Mather Economics is a great use of your time!
- We do ALL the heavy lifting, by pulling, cleaning, and preparing your data. We just need login credentials to Wine Direct, OrderPort, Commerce7 or any other providers.
- You will have actionable tools and recommendations within 6-8 weeks. So, no long wait to start using your data more effectively.
- Mather provides monthly consulting to help your team better understand the opportunities. We also help solve other challenges that arises throughout the year.
- Our single-platform model keeps the fees very reasonable. Our fees have no hidden charges.
- Clients don’t sign long-term contracts. You are free to terminate with a 30-day notice. We work hard to earn your business each month.
- The ROI for our services has proven to be in the 5:1-10:1 range. It’s a no-brainer. Get the data science help and the service pays for itself!
So, want to learn more? Connect with me at bob@mathereconomics.com.
Looking forward to speaking with you soon.
Regards,
