How the eCommerce Industry Can Predict Customer Churn with AI

The eCommerce industry is growing rapidly, and so is the competition. You need to enhance your customer base to stay ahead in the competitive market. But what if your customers start leaving your application? Will staying ahead of your competitors with a small customer base be possible? No. It has only one solution, and that is to come up with innovative marketing strategies that could retain customers. But how can you know which customers are thinking of leaving your eCommerce business? Of course, predicting the future is impossible. However, predicting customer churn becomes possible with AI.

AI has conquered people’s minds through its accuracy and prediction. The same thing applies to eCommerce businesses. By analyzing customer behavior, interaction, and purchase history, you can quickly identify customers on the verge of leaving your eCommerce business.

Once you identify such customers, you can strategize targeted marketing campaigns, special discount offers, and personalized customer service to retain those customers. Besides, AI predictive analytics has become a cost-effective solution for maintaining your customers.

However, despite AI being the future, many eCommerce businesses are unaware of the numerous benefits that AI can bring to their business.

Also, some businesses might be unaware of how AI can prevent customer churn. Besides this, numerous confusions might be going on in your mind. And this blog becomes the answer to all your multiple questions.

This blog will tell you how the eCommerce business can predict customer churn using AI, the benefits of using the AI prediction model in the eCommerce industry, and the different eCommerce platforms that have been using AI to predict customer churn.

Why Choose AI in the eCommerce Industry for Customer Churn Prediction

Retaining customers is very important for maintaining business success. For this, customer churn prediction becomes very helpful. Customer churn prediction allows businesses to know which customers are likely to leave. Based on the results, companies can implement marketing strategies that could help them retain their customers.

Earlier, businesses used traditional methods of predicting customer churn using historical data. However, manually analyzing large amounts of data took a lot of time and effort, resulting in inaccurate and inefficient results. This is where AI came into the picture. 

With AI-powered predictive analysis, companies can quickly analyze large amounts of data with higher precision and efficiency. Such accurate results help the eCommerce platform retain its customers for longer. 

Here are some of the great benefits of leveraging AI in the eCommerce industry to prevent customer churn:

Decrease in Customer Churn Rates

High customer churn proves to be one of the biggest hindrances to the success of an eCommerce business. That’s why it becomes a prime necessity for eCommerce businesses to reduce customer churn as much as possible. AI churn prediction has become helpful in knowing which customers will likely leave. Based on the prediction, companies can plan marketing strategies, improve customer service, and conduct special discounts to prevent customer churn.

Informed Decision-Making

Performing data analysis is a crucial process as it helps you to make critical decisions. That’s why it becomes necessary for your data analysis to be accurate and precise. However, manual data analysis is prone to errors, while AI-based data analysis, on the contrary, is always correct. Using AI for churn prediction ensures accurate results, helping you make informed decisions.

Driving Personalized Experience

During churn prediction, you can identify the challenges your customers are facing. Some customers might not find their desired products, while others might face challenges when using your purchased products. Based on the results, you can plan personalized solutions that could effectively help you deliver personalized customer experiences. Such personalized experience also helps in building long-term relations with customers.

Getting Competitive Benefit

In this competitive era, no eCommerce business can afford to lose customers. AI churn prediction becomes a beneficial means of retaining your customers, allowing you to stay ahead of your competitors. Moreover, the AI-powered churn prediction allows you to expand your customer base by planning effective marketing strategies for existing and new customers. The higher the customer base, the more significant the competitive advantage.

Acquisition Cost Reduction

Getting new customers is one of the most challenging tasks for any eCommerce business. That’s why your existing customers are gold mines, and retaining them is very important for the survival of your business. AI-based prediction helps you identify the customers who are likely to leave. Based on the analysis, you can become future-ready by planning strategies that could effectively retain existing customers.

How eCommerce Business Can Use AI to Predict Customer Churn

Predictive Analysis Model

Predicting the human brain is impossible. However, AI has the power to make the impossible things possible. That’s why an AI-powered predictive analytics model makes predicting customer behavior possible. You get detailed information about customers who haven’t purchased in the last six months based on their purchase history and demographics. Such data helps you easily predict customers who are likely to churn.

Moreover, predictive modeling also helps analyze a particular customer’s purchase frequency. Purchase frequency gives you a detailed analysis of how often a specific customer has purchased from your eCommerce platform. If a customer’s purchase frequency has decreased considerably in the past few months, they are likely on the verge of churning.

With the help of AI-based predictive analysis, you can immediately make marketing strategies that could help you prevent customers from leaving.

Behavioral Analysis

Customer churn can also be predicted through customer behavior. AI-powered behavioral analysis helps you analyze numerous customer activities like purchase history, interaction, and browsing history. Based on these activities, you can easily predict whether a particular customer will churn.

AI tracks customers’ navigation history, helping you understand their browsing and purchase patterns. You can learn about customers’ interest levels by understanding past navigation patterns. For instance, customers can make numerous purchases from your eCommerce store frequently, and suddenly, the same customers have not made any purchases for one month. This indicates that the customer has started taking less interest in your products or that your products do not align with their needs. 

Behavioral analysis helps you understand your customers’ needs and recommend products that align perfectly with them. Such personalized experience will make the customers feel valued and build strong relations with you.

Segmentation

Successful marketing campaigns often rely on effective customer segmentation. Customers are segmented based on their interests, purchase history, demographics, etc. Segmentation helps you offer personalized services to your customers, eventually building customer trust and loyalty. The same customer segmentation also enables you to retain your customers. AI-powered segmentation tools make it possible.

You can segment your customers based on demographics and behavior and make targeted marketing strategies to retain them. For instance, some customers prefer to purchase only during sale seasons. They will likely churn if you have not conducted discount offers in the past few months.

Segmenting the customers manually is a hectic process. However, with the help of AI, you can segment hundreds of customers in no time. AI-based customer segmentation allows you to quickly develop targeted strategies and deliver personalized experiences.

Analysis of Customer Sentiments

Customer feedback and reviews are often neglected, and they are thought of as being of less importance. However, they can be an excellent medium to predict customer churn if leveraged well. If your products receive constant negative feedback regarding their quality, you will surely lose your customers. As feedback is in text form, predicting their emotions is quite challenging. 

However, with AI on your side, anything becomes possible.

AI-based sentiment analysis helps you understand your customers’ sentiments hidden in their reviews and feedback. You can easily predict the customers’ thoughts about leaving from such an analysis. Besides, AI can also analyze comments on social media platforms and provide profound knowledge about the emotions hidden behind those comments.

Sentiment analysis becomes your helping partner in knowing your customers’ challenges and providing immediate solutions, eventually helping you retain them.

Prediction Score

AI-based prediction score combines behavioral, sentiment, and prediction analysis. This prediction score lets you know the risk level of each customer. Some customers, known as high-risk customers, would be on the verge of leaving. To retain these customers, you would need to take immediate action. For instance, you can offer special discounts and personalized recommendations to keep them. Moreover, you can provide personalized customer support by identifying their problems with your eCommerce app or products.

So, the churn prediction score helps you identify high-risk customers and lets you plan personalized strategies to retain them in the long run.

eCommerce Platforms Using AI for Churn Prediction

Amazon

Amazon has become its most prominent user when it comes to leveraging AI churn prediction. AI churn prediction is the reason behind Amazon’s tremendous success and customer base. Amazon continually develops new strategies to retain customers. Based on browsing and purchase history, Amazon recommends products to its customers, making it easy for them to use their desired products. Churn prediction also helps Amazon identify high-risk customers and conduct targeted campaigns, such as discounts and offers, to retain them.

Shopify

Shopify platform has been helping businesses create eCommerce websites for years. The sole reason behind Shopify’s longevity is AI churn prediction. Shopify understands that every business is different, and so will its needs. It segments its customers based on their purchase and browsing history. Such segmentation helps Shopify create personalized product recommendations and marketing campaigns, which allows it to retain its customers in the long run.

Walmart

Being the most significant retail corporation, Walmart has successfully retained its customers for years, and the sole reason for this is AI. Walmart uses AI to analyze cart abandonment and purchase frequency. Based on these insights, Walmart offers special discounts to encourage customers to continue shopping. Besides this, sentiment analysis helps Walmart identify high-risk customers and provides them with constant support and guidance to retain them.

Final Thoughts

Customers are the drivers for any eCommerce business. Businesses have to face significant losses by losing them. That’s why it becomes utterly essential to retain customers to sustain growth. Moreover, as the eCommerce business grows more competitive every day, you cannot afford to lose your customers to your competitors. That’s why performing AI-powered predictive analysis is utterly helpful for eCommerce businesses in retaining customers.

AI churn prediction allows you to conduct in-depth customer analyses with the help of various methods like behavioral analysis, prediction model, sentiment analysis, churn prediction score, and segmentation. By leveraging all these methods, AI ensures you can make informed decisions with ultimate accuracy in no time. 

Moreover, AI prediction allows eCommerce businesses to become future-ready by strategizing to retain their customers for years.  So, AI can become a beneficial tool for eCommerce businesses to build long-term relations with their customers.

However, leveraging AI in eCommerce solutions is challenging. You need high-end expertise and skills to use AI in eCommerce solutions. Technocrats Horizons proves to be a highly experienced eCommerce solution company. Our eCommerce website solutions are a perfect blend of expertise and perfection.

We know the power of AI, so our developed eCommerce solutions leverage AI to the fullest. From customer retention to personalized customer support, we ensure your eCommerce platform stays ahead of your competitors.

Contact us now to get innovative AI-powered eCommerce development solutions.