Lennox Industries: Attrition Forecasting

October 31st, 2011

Client: Lennox Industries
Team:  Diana Batten, Maddie Kamp
Faculty Advisor: Dr. Siems
Year: 2011
Documents: Final Report, Presentation

Lennox Industries is a residential and commercial heating and air-conditioning company with a 13-15% market share in about 80 countries. Lennox is unique in that they operate as both the manufacturer and distributor of their products selling directly to their customers, typically contractors.

This project identified correlations between customers’ buying patterns and their attrition, or loss of their business. Based on transaction-level data of 4,500 customers over a three-year period, an early-warning model was developed to signal the potential loss of a customer and enable Lennox to act preemptively. The analytics were based on a ranking procedure based on key indicators and a Markov chain analysis with categorical transition probabilities derived from historical data. With this model encapsulated in spreadsheet form with the ability to customize the analysis geographically and seasonally, the results give Lennox management a new tool to maintain their current customers and evaluate new markets.

Categories: Dallas-Ft. Worth Area, Forecasting, Manufacturing, Marketing, Markov analysis, Texas, United States Tags:
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