Customer churn

Customer churn is a measure of the company's tendency to lose customers. Our user story speaks of the need to detect at-risk customers and prevent them from becoming a lost customer.

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As a sales representative, I want to see which customers I'm at risk of losing so that I can take action today to prevent their leaving.

Surely, there are many variables that we may use to predict customer churn. In this case we expect customers to consistently make a purchase every so many days, so we will use a variable called customer purchase frequency to detect those that we are at risk of losing.

We could calculate the average number of days between purchases and warn sales representatives when the number of days since a customer's last purchase exceeds that average.

However, a simple average may not always be an accurate measure of a customer's true purchasing behavior. If we assume that their purchase frequency is normally distributed then we use the t-test to determine...