As the National Head Customer Retention, of a Car Insurance provider ABC Ltd, the most important
Question:
As the National Head – Customer Retention, of a Car Insurance provider ABC Ltd, the most important metric that you track is - New Car Year 1 retention aka “Y1_ret”.
Y1_ret = Out of all the brand new cars that were insured with ABC Ltd in year 0, how many of them were renewed with ABC Ltd in Year 1
Eg. If new 20000 new cars were sold in Year 2014 out of which 12000 cars were insured with ABC Ltd. If out of those 12000 cars, 6600 cars renewed the insurance with ABC Ltd in 2015, then the Y1_ret for 2015 = 55%.
On 1 st January, 2019, you receive the data for 2018 and the data shows that in 2018, the Y1_ret was 75%. In 2017, Y1_ret was 80%. Concerned over this drop in 2018, you seek the Y1_ret data for all 5 zones – North, South, East, West, Central. You are surprised to find that North, East and West have same Y1_ret as last year and Central and South zones have better Y1_ret than last year. This seems puzzling. The National Y1_ret has dropped but the Y1_ret of none of the zones shows the drop. Is this possible? If yes, please explain why.
Expert Answer:
Yes it is possible for the national Y1ret to drop while the Y1ret of individual zones does not show ... View the full answer
