Blue Chip Crisis��WHAT CAN BLUECHIP CREDIT DO TO

DECREASE ATTRITION RATES?

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By: Nav Thukral, Pranay Aggarwal, Chirag Kharade, Shikha Rajesh

Current Situation: Problem and Root

• The base problem that can be interpreted from the new and updated data is that the the company is considering the wrong data to make company policies for future products. However, it is evident from our analysis that the new additions to the dataset change the demographics significantly

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Attrition Prone Target Demographic

• Using the right data set, provided on the next slide(fig 1.1 and fig1.2), we see that the attrition prone target demographic are that people between 18-25 years of age; unlike the faulty data that they were originally working with, which predicted that the people between the age of 60-69 have the highest attrition rate.
• Using the table(table 1.1) for income category (per annum) and the average credit limit (per month), we arrive at the conclusion that the credit limit mean for different income categories is inappropriate. For instance, the income category less than $40k has a credit limit mean of 6447.160 and the limit for the $40K-$60K is 5071.578. However, higher income categories should have higher credit limits.

Fig 1.1

Fig 1.1

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Fig 1.1

Fig 1.2

The first image represents the credit limit vs age of the users. Also the level of education was observed which helped in interpreting the exact type of people who stop using the card.

The second image represents the distribution of the attrition rate vs income category. This helped in drawing the conclusions about the income category which has a higher attrition rate.

Effective Mitigation

We have revamped the data to be used, to make a relevant forecast and to mitigate the problems for having a profitable year

• We need to change the cash back policies for the blue credit card holders. We start with entrancing them with 10% for the first 3 months, as a welcome bonus, then after 3 more months, it reduces to 7%, instead of completely discontinuing them as complained in the review by the college students who are the attrition prone target demographic. This tempts them to continue with the company. After 3 more months, it reduces to 4% and at the end of the year it reduces to 2% cashback, but that stays constant till the time they continue with the company.

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• The credit limit should also be adjusted to be between 150% - 175% of their monthly income for income brackets of more then $60K per annum and under 100%-120% for income levels less than $60K.

• The reason the card isn't widely accepted near university is that it’s a gold card. Our product for university students is the tier1 Blue Card which may be more useful to younger generations. Thus, it doesn't make sense to have a wide availability of Gold card accepting merchants near the university.The user can move to other cards if that poses to be a greater issue.

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• As evident from the review from our Platinum members, the card is not known to the age group of less than 40. It is because Platinum card is offered to members with high income levels and it is not suitable for younger generations who may be attracted by lower pricing and credit limits that suit their needs. If the customers want to use a more widely known card, they can opt for a lower tier card.

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Thus, BlueChip Credit should change their product/marketing to lower attrition rates

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table 1.1

Using this table, we arrived at the second major problem of the inappropriate credit limits, which is actually resulting in loss of customers, thus, leading to a higher employee turnover. As seen clearly by the credit limit mean column.

Potential Threats and Measures for Reduction

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• By introducing this cashback on the blue card, we are at the threat of incurring a loss or evening out and not getting a profit. To combat this, we introduce a higher interest rate than other banks if they don’t pay back on time. It comes with a challenge that they might leave due to this higher interest rate, but it actually works in our favor. Our data shows that offering a higher cash-back reward is a successful strategy in retaining customers and keeping them loyal. The longer customers stay with us, the higher the probability of delayed repayments, which in turn results in both increased profits from interest and the increased number customers.
• By introducing the newer credit limits, the number of people who were attracted by high credit limit offerings of the company can be reduced. However, the cashback offerings can bring in newer and more loyal customers which will help drastically reduce the attrition levels. This will be evident as the card becomes more affordable and pocket friendly to the consumer, it can be measured easily from the analytic survey which measures the number of attrited vs existing customers.

Profit Driven Target Demographic

• The income category of $120k is the category which has the lowest average attrition rate. This indicates that they are bringing in the most profit for the company. This is visible from the table below.