Churn, also known as customer attrition or customer turnover, is a term used by businesses to refer to the loss of existing customers. Specifically, churn measures the rate at which customers stop engaging with or transacting with a particular platform or business. In other words, churn is used to measure customer retention and can be an indicator of customer satisfaction or dissatisfaction.
Churn can have a major impact on any business’ overall success. For example, without having any new customer acquisition, a business can still make money by decreasing its churn rate. It is easier and more cost-effective to retain existing customers than to acquire new ones, due to the lifetime value of a customer.
Measuring Churn
Churn rates can be measured in several ways, though the most popular metric is churn rate over a period of time (for example, in the past month). Generally, it is calculated as the total number of customers lost during a period divided by the total number of customers at the start of the period. It can also be calculated on an individual basis, measuring the total number of customers that left during a given period compared to the total number of customers that remained.
Measuring and Decreasing Churn
Businesses measure churn rate in order to identify customer habits and trends, better understand their customers’ needs, and make improvements to their product or service. There are various tactics used to reduce churn rate; one common solution is providing discounts or loyalty programs for existing customers so they remain engaged and happy. Additionally, providing customer support in various forms such as email, phone, and live chat can help retain customers and reduce churn rate. Finally, using data analysis for customer segmentation and targeted marketing can help ensure existing customers are receiving personalized services and staying loyal.
Conclusion
In conclusion, businesses must understand the concept of churn and its implications for customer churn and loyalty. By measuring and understanding customer churn, businesses can better identify areas to improve and reduce their churn rates, leading to better success and customer engagement.