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CHAID Analysis

In this example, a customer loyalty analysis used CHAID to illustrate the level of risk Brand A has of losing customers when different events occur. Here, respondent companies were segmented into groups that had the highest and lowest concentrations of cancelled/lapsed accounts based on what problems they had encountered with their customers. At the top of the chart (beginning of analysis) all respondents are given the same risk score. As one looks down the CHAID tree all of the nodes display the impact each event has on the potential loss of customer. The five nodes circled in blue indicate the different segments / risks areas that each company falls into. By using this type of CHAID analysis (segmentation), a company can determine the risk of customer loss at each node / event occurrence.

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