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Customer churn is one of the most important things to understand when you are growing your business. It is the percentage of your consumers that have stopped using your products and services during a specific time frame. While it can be discouraging, it will help your company understand where you need to put more of your focus and recognize more about your customer retention.

To calculate churn you divide the number of customers you lost during that time frame by the number of customers you had at the beginning of that same time period.

For example, If you start your quarter with 650 customers and then end with 550, your churn rate would be 15% because you lost 15% of your customers in that time frame. 

Your company wants the churn rate to be as low as possible, so knowing that value during each quarter should be your top priority. While it is important to calculate the churn rate of customers, there are also other factors that you can calculate churn rate for, some of those being: 

The number of customers lost

The value of recurring business lost

The percentage of recurring value lost 

Why is Customer Churn so important? 

It is natural to lose some of your customers so you might be wondering why it is important to calculate exactly how many. It is beneficial for your company to do this because it costs more to obtain new customers than it is to keep existing ones. So if you are able to keep the churn to a low percentage then it will keep you from having to put more money into acquiring new customers. Returning customers will spend up to 67% more on your companies products so it is important to keep those customers. In return, your company will be able to allocate money into other areas rather than in customer retention. 

What Causes Churn? 

There are 3 reasons why customer churn is happening with your company: 

You are attracting the wrong customers 

There have been plenty of times that a customer signs up for your services without truly understand what the products do. Once they realize either that it wasn't the service that they needed or it wasn't meeting their needs then it is very likely that they will leave for a different company. It is important to ensure that your customers understand the services and know that it is the right fit for them to make sure that they will turn into long-term customers rather than short-term. 

Your customers are getting what they want from your products/services 

Your customers are signing up for your products for a specific reason, so it is vital that they get their desired outcome from the beginning. It is much harder to keep a customer when they have to wait for your products to boost their company and could make it harder for them to stick around. 

Your customers aren't getting the support they need

No matter how experienced a customer is in their field, it is likely that they will have questions and concerns about your products. And if it starts out as a small problem, it could easily turn into a larger one if it is not resolved quickly. Having real people there to walk through these issues with your consumers and not a bot will resonate with them and show them that you care about their needs

Quick tips for reducing customer churn: 

    • Pay attention to your best customers 
    • Analyze churn as it is happening 
    • Show your customers that you care 
    • Communicate with your customers 
    • Offer incentives




If you are looking to reduce your customer churn, Brandmovers wants to help you! Reach out to us today and see what the next step is!