CCRS Customer Lifetime Value & Churn Management 2

Question 1

What does 'negative churn' indicate in a subscription business?

Accepted Answer

Expansion revenue from existing customers exceeds revenue lost from churned customers

Answer

Negative churn occurs when revenue from upsells, cross-sells, and expansions from existing customers exceeds the revenue lost from churned customers, resulting in net revenue growth.

Question 2

How is Net Revenue Retention (NRR) calculated?

Accepted Answer

(Starting MRR + Expansion MRR − Churned MRR − Contraction MRR) / Starting MRR × 100

Answer

NRR is calculated by adding expansion MRR, subtracting churned and contraction MRR from starting MRR, then dividing by starting MRR and multiplying by 100.

Question 3

Which customer segmentation model is most commonly used to identify high-value customers at churn risk?

Accepted Answer

RFM (Recency, Frequency, Monetary) Analysis

Answer

RFM Analysis segments customers by Recency of last purchase, Frequency of purchases, and Monetary value, making it highly effective for spotting high-value customers showing early churn signals.

Question 4

What is the primary purpose of a churn cohort analysis?

Accepted Answer

To track churn rates of specific customer groups acquired during the same time period

Answer

Cohort analysis groups customers by acquisition date and tracks their churn behavior over time, revealing patterns about when and why specific customer segments disengage.

Question 5

What metric represents the average duration a customer remains active before churning?

Accepted Answer

Average Customer Lifespan

Answer

Average Customer Lifespan measures the average number of time periods a customer remains active and is a key variable in CLV calculations.

(CCRS) Certified Customer Retention Specialist Practice Test

(CCRS) Certified Customer Retention Specialist Practice Test

CCRS Customer Lifetime Value & Churn Management 2