Analyzing Customer Churn – Restricted Mean Survival Time

What if you could spend $50 per customer to reduce churn in your business by 1 percentage point. Would you do it? Would it make financial sense? Or would you just be burning money?

Joker Burning Money

This is what I think of any time somebody says “burning money.” Either this, or that Career Builder commercial with the monkeys.

Sometimes, taking action to reduce customer churn costs money. In those instances, it can be helpful to know how much revenue churn is costing you… and how much of it you could recapture. Lucky for us, there’s a stat for that! It’s called “Restricted Mean Survival Time,” and it allows us to easily quantify the monetary impact of changes in customer churn. Let’s think about putting it to use!

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