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Churn risk identification as an important aspect of marketing controlling – the case of a German start-up company

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Prończuk A.

Journal of Economics and Management

2018

vol. 34

170-183

Aim/purpose – The purpose of this paper is to understand possible methods of identifying churn risk in small and medium-sized start-up companies. Design/methodology/approach – This paper describes the case study of a German IT start-up company and its churn risk identification approach. All presented insights are based on the company’s internal documentation. Additionally, the author conducted online surveys addressing 50 client teams asking them to assess the occurrence probability of the most common risk. The surveys have been conducted every month (August- -November 2017) with 16 middle and upper managers. Findings – Based on the research findings, it has been found out that consideration of customer opinions and estimations is very important to prevent the potential churn and strengthen marketing controlling systems. When a company aims to start tracking potential risks, it is recommendable to focus on small steps and continue adding additional risk factors that need to be tracked. Research implications/limitations – This case study shows that a customized churn risk identification system does not have to be very advanced or sophisticated. The most important aspect of an effective churn risk identification system is its ability to be fully implemented, controlled, and corrected in case of any methodological issues or inconsistencies. However, the core key performance indicators should not be assessed based on the internal input, as self-evaluation approach tends to be very error-prone and subjective. Originality/value/contribution – The research confirms that it is important to introduce risk identification as a holistic process, focusing not only on defining potential risks, but also estimating which risk factors are the most important ones from the strategic point of view. Introducing churn risk KPIs and tracking them on a regular basis contributes to transparency and creativity of strategic and tactical management, enabling managers to identify issues and address them in a proactive manner.

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1 Journal of Economics and Management

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Churn risk identification as an important aspect of marketing controlling – the case of a German start-up company