What is value-churn index in SAP CRM-ANA - CRM Analytics?

SAP Term: value-churn index

• Component: CRM-ANA

• Component Name: CRM Analytics

• Description: Incorporates into a single index the value of a customer for a company and the likelihood of that customer churning. The value-churn index is calculated as follows: Value-churn index = likelihood to churn * customer value index The higher the value-churn index, the more valuable the customer is to the company or the higher that customer's likelihood to churn. In the analytical application Churn Management, the value-churn index is calculated using the data mining method Scoring.

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• Key Concepts: 
  The value-churn index is a metric used in SAP CRM Analytics to measure customer loyalty. It is calculated by dividing the total value of customer purchases by the total number of customers who have made purchases. The higher the value-churn index, the more loyal customers are to a company. 
  
  How to use it: 
  The value-churn index can be used to measure customer loyalty over time. It can also be used to compare customer loyalty across different products or services. Additionally, it can be used to identify areas where customer loyalty needs to be improved. 
  
  Tips & Tricks: 
  When calculating the value-churn index, it is important to consider the total number of customers who have made purchases, not just those who have made repeat purchases. Additionally, it is important to consider the total value of all purchases, not just those made by repeat customers. 
  
  Related Information: 
  The value-churn index is related to other metrics such as customer lifetime value and customer retention rate. Additionally, it can be used in conjunction with other metrics such as customer satisfaction and customer engagement to gain a better understanding of customer loyalty.