Customer Churn Analysis

Customer churn is a vital problem for any subscription business. The example dashboard in this chapter presents an analysis of the customer churn phenomenon for a broadband service provider. This chapter will walk you through the process of building the dashboard using the 3-D approach: Determine, Design, and Develop. You will understand the relevant churn metrics and how blending can be used to calculate them in Looker Studio.

In this chapter, we are going to cover the following topics:

• Describing the example scenario
• Building the dashboard – Stage 1: Determine
• Building the dashboard – Stage 2: Design
• Building the dashboard – Stage 3: Develop

Technical requirements

To follow the implementation steps for building the example dashboard in this chapter, you need to have a Google account that allows you to create reports with Looker Studio. It is recommended that you use Chrome, Safari, or Firefox as your browser. Also, make sure Looker Studio is supported in your country (https://support.google.com/looker-studio/answer/7657679?hl=en#zippy=%2Clist-of-unsupported-countries). The dataset is a CSV file and is available to download in compressed form at https://github.com/PacktPublishing/Data-Storytelling-with-Google-Data-Studio/blob/master/customer_churn_data.zip.

You can access the example dashboard at https://lookerstudio.google.com/u/0/reporting/a02f5dd9-1070-42a6-8ebb-93d89947e666/preview, which you can copy and make your own. The enriched Looker Studio data source that’s used for the report can be viewed at https://lookerstudio.google.com/datasources/99469508-0cd4-4269-9522-0f95bf3de996.

Describing the example scenario

Customer churn is a phenomenon where customers voluntarily or involuntarily stop doing business with a company. It affects subscription-based businesses such as Software-as-a-Service (SaaS), media streaming, telecom, and others as well as non-subscription-based businesses such as retail, hospitality, travel, and others. A non-subscription-based business relies on new customers and repeat purchases from existing customers to generate revenue. Their business model is transaction-based, where repeat purchases are not guaranteed.

In contrast, a subscription business has a customer generating a steady stream of revenue for the duration of the subscription. Losing customers implies lost revenue. Measuring and reducing customer churn is more critical to a subscription-based company as its business model is highly dependent on the long-term relationship with its customers.

It is more expensive to acquire new customers than to retain existing ones. The...

Building the dashboard- Stage 1: Determine

In the Determine stage of the dashboard building approach, you determine the target users and objectives of the dashboard. You also identify the data needed to build the dashboard in this stage.

The target audience of this dashboard is the customer success teams in the company. Customer churn is an organizational problem and various departments such as marketing, sales, production, and support have a stake in it. However, the central customer success department is responsible for increasing customer satisfaction, decreasing churn, and driving product adoption.

The purpose of the dashboard is to depict the churn metrics for the last 24 months and help identify potential causes of customer loss. The questions that the target audience aims to answer with this dashboard include the following:

• At what rate do customers leave the company?
• What revenue loss has been incurred?
• When do customers leave the company concerning...

Building the dashboard- Stage 2: Design

In the Design stage, you define the key metrics to be monitored, evaluate the need for any data manipulation, choose the right visualizations and filters needed, and create a wireframe of the dashboard to organize the various components.

Defining the metrics

The primary metrics relevant for measuring customer churn are the customer churn rate and revenue churn rate. You want the customer churn rate to be as low as possible and the revenue churn rate to be a negative value. A negative revenue churn implies a gain in revenue despite a non-zero customer churn owing to new customer acquisitions and upgrades from existing customers.

A simple way to compute customer churn at a monthly level is as follows:

The monthly churn rate can be extrapolated to an annual or longer period using the following formula:

Here, N = the number of months

Revenue churn provides another lens to look at the health of the customer...

Building the dashboard- Stage 3: Develop

To start creating the dashboard, first, you must set up the data source in Looker Studio.

Setting up the data source

The dataset is a CSV file that you can connect to from Looker Studio using the File Upload connector.

The steps to create the data source are as follows:

1. Download the ZIP file from https://github.com/PacktPublishing/Data-Storytelling-with-Google-Data-Studio/blob/master/customer_churn_data.zip and unzip it.
2. From the Looker Studio home page, select Create | Data source.
3. On the Connectors page, select File Upload and add the customer_churn_data.csv file. If you encounter any upload errors, make sure the CSV file is saved as UTF-8 CSV.
4. Name the dataset Customer churn data.
5. Once the file has been uploaded, click CONNECT.

Now, the data source can be enriched by renaming the fields appropriately, updating the data types, and adding new derived fields:

• Rename the month field to year_month...

Summary

In this chapter, you learned about the customer churn problem in subscription businesses and went through the step-by-step process of building a dashboard to monitor key customer churn metrics for a broadband service provider. You used the 3D approach to dashboard building by first Determining the target audience, the business questions that the dashboard needs to address, and the data available to meet the needs. Then, you defined the right metrics, chose the appropriate visualization types, and Designed the wireframe of the dashboard. After that, you Developed the dashboard by setting up and enriching the data source and then building various visualizations and components based on the dashboard’s objectives and the wireframe. You used blending to implement certain complex metrics. In the next chapter, you will learn how to track and monitor Looker Studio report usage using Google Analytics.