Churn refers to when a consumer stops doing business with a company. It commonly refers to when consumers unsubscribe or discontinue their subscription. Churn is directly related to growth rate, in order for your consumer market to expand the growth rate must exceed the rate that customers churn or unsubscribe. Churn can be caused by a number of factors, including price changes, dissatisfaction with the product or service, or a lack of convenience.
There are a few ways to reduce churn. One is to make it easier for customers to do business with you, by highlighting customer service qualities. Another is to make sure that your product or service exceeds expectations by meeting the needs and wants of the customer. You can also offer incentives for customers to stay with your company, through loyalty programs, discounts, or free products or services.
Churn rate can be a major challenge for companies to regulate, but if you are able to reduce it, your company can see major benefits in terms of growth.
How is Churn Rate calculated?
Churn rate is typically calculated by dividing the number of customers who left during a certain period by the total number of customers at the beginning of that period.
Why is Churn Rate important?
Understanding and monitoring churn rate helps companies understand customer satisfaction, identify potential issues, and take action to reduce customer attrition.
Fun Fact:
Rate "According to the Harvard Business Review, the average churn rate for subscription-based businesses is 5-7% per month" (Lemkin, 2017).