Client is a major gas and electricity utility
- Supplies to corporate, SME and residential customers • Significant churn problem • Driven by power-liberalization of the energy market in Europe • Problem is largest in the SME segment, has engaged BCG to help with the SME segment
- It is possible to predict customers likely to churn using a predictive model
- Hypothesis that churn is driven by customer price sensitivity
- Client wants to try discounting strategy • SME division head suggests that offering customers at high propensity to churn a 20% discount might be effective