Since Klaviyo launched Predictive Analytics and AI a few years ago there have been many new terms and acronyms appearing in the platform. Although sometimes confusing, these new metrics can be hugely beneficial to Ecommerce email marketers who know how to use them.
We’ll be writing a lot about Klaviyo’s AI and Predictive Analytics, breaking everything down in an easy to understand way for both new and experienced Klaviyo users. Today we’re focusing on Klaviyo Churn Risk Prediction.
So what does Churn Risk mean in Klaviyo? This metric helps you determine the likelyhood of a customer being lost, or churning, based on a number of factors and data points which are unique to your online store.
Here’s what we’ll cover in this quick and easy to understand guide.
What is Klaviyo Churn Risk Prediction?
Churn Risk is a number between 0 and 1 which represents how likely Klaviyo thinks a particular customer is to never return to your store and purchase again. Or the likelyhood of them ‘churning’ which is another way of saying becoming a lost customer.
The Churn Risk score is unique to each customer in each store. If a customer has a score of 0.5 this translates to a 50% chance of them churning. 0.3 would be a 30% chance of churn, and 0.8 would equal an 80% churn risk. It is important to remember that as part of Klaviyo’s Predictive Analytics, this metric is a prediction only, and should be treated that way. It is an estimated based on the way other customers interact with your store.
When looking at Klaviyo Churn Risk predictions, a lower number is better.
How is Churn Risk Calculated in Klaviyo?
A number of factors and datapoints go into this calculation, however the a customer’s individual purchase history has the biggest impact on churn risk score. The more times someone has purchased from you the lower their churn risk prediction will be. Time since last purchase is also a factor. So someone who purchased from you a week ago will have a lower churn risk that a similar customer who purchased from you 4 months ago and never returned.
The Klaviyo AI and Predictive Analytics engine looks at all customer behavior in your store to determine benchmarks around average purchase frequencies, average time between purchases, and more. Not all of this data is made available for you to see however it influences the Churn Risk scores for each customer in your store. Essentially each customer is compared to your store averages to determine how likely Klaviyo’s AI believes they are to turn.
For example: Two customers shopping at two different stores who have both purchased three times with their most recent purchase five days ago will have different Churn Risk scores. This is because the average benchmarks around purchase frequency and timing for each store are different.
Below we can see loyal customer for one of our clients. This person has purchased many times, with their most recent order being placed earlier today. As a result the calculated Churn Risk is extremely low at just 5%. Here the Klaviyo Predictive Analytics AI is essentially saying there is a 95% probability this customer will come back and buy again at some point in the future.
How To Use The Klaviyo Churn Risk Prediction to Inform Your Email Strategy in Flows and Campaigns
Although the Churn Risk Prediction score is not available to be used directly as a trigger or to build segments in Klaviyo, other metrics from the Predictive Analytics and CLV tools are.
We can essentially target customers who have passed their estimated churn date and not yet purchased where the Klaviyo AI predicted they should have. We can also email customers around the date the Predictive Analytics engine expects them to return and make their next purchase.
By the way, if you like learning about advanced Klaviyo strategies like these then be sure to check out our Ecommerce email marketing course where we go into much more detail.
Targeting Churn Risk With Flows
Here we are going to build Churn Risk Flows to target customers around the time Klaviyo’s AI expects someone to come back and place their next order. This is not directly targeting people based on Churn Risk score, but it is a strategy to reduce churn risk using the Expected Next Order Date data.
The flow to build here is the Repeat Purchase Nurture Series. Instead of using fixed timing to send emails to everyone after a set number of days, each customer gets their own customized timing based on when Klaviyo thinks they are most likely to make their next purchase.
Targeting Churn Risk With Campaigns
The example below is a Klaviyo segment targeted customers who are still engaged with emails – they’ve opened or clicked recently – but have not made a recent purchase. According to Klaviyo’s Predictive Analytics these people there were expected to make a repeat purchase over a year ago. You can adjust these settings however you like.
Hopefully this article helps you understand what churn risk is in Klaviyo. If you’d like to learn more about the platform’s more advanced features and how they could benefit your brand, be sure to check out our Klaviyo Agency and Klaviyo Consulting services to see how our team here at Ecommerce Intelligence can help you grow.