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ACCA Strategic Professional · Advanced Performance Management · Technology and information systems

Marlow Telecom analyses its customer database to explain why 12% of customers cancelled their contracts last quarter, by examining usage patterns, complaints and tariff changes for those who left. Which type of analytics is being used?

This is diagnostic analytics. The company already knows the churn rate and is now examining usage, complaints and tariff changes to explain why customers left. Descriptive analytics would only report the figure, predictive would forecast future churn, and prescriptive would recommend actions.

  1. ADescriptive analytics, because it only summarises how many customers left
  2. BDiagnostic analytics, because it investigates the causes of a past outcomeCorrect
  3. CPredictive analytics, because it forecasts which customers will leave next
  4. DPrescriptive analytics, because it recommends the optimal retention offer

Explanation

Diagnostic analytics asks why something happened by drilling into data for causes. The company already knows the 12% figure (descriptive) and is now exploring reasons. It is not forecasting future churn or recommending actions, so predictive and prescriptive are wrong.

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