Churn, baby churn! Wait, no. While customer churn isn’t the happiest factor to measure, it is one of the most important. Addressing the cold hard truth about your customer retention is vital to the growth of your business and increased customer satisfaction.


Customer churn is the rate at which customers stop doing business with you during a specific time frame. Depending on the nature of your business, customer churn can be based on different factors. Some examples of these factors are: subscription cancelations, account closure, non-renewal of a contract, consumer decision to switch stores or providers.

Once your business decides how you will quantify and define what customer attrition is for your business, you can begin to calculate your churn rate.


Follow these steps to calculate churn rate:

1. Determine the time period you are measuring for (monthly, annually, quarterly)

2. Determine the number of customers at the beginning of the period

3. Determine the number of customers lost by the end of that period

4. Divide the number of lost customers by the number of customers at the beginning of the period

5. Multiply that number by 100 to get the customer churn rate in percent When it comes to churn rate, the lower the better; an “acceptable” churn rate is anywhere from 2%-8%, but even if you fall within or below, you should always be striving to reduce it.


You may be thinking that losing customers is natural, and a churn rate of 4% doesn’t sound that bad, so why is churn rate such an important metric? When we look at this idea from a monetary perspective, you will soon understand why. It costs significantly more to acquire a new customer than it does to keep your existing ones. Returning customers are likely to spend 67% more with your company, so an increase of just 5% in your customer retention rate can lead to at least a 25% increase in profit. Retaining your existing customers allows your company to avoid spending time, money, and other resources on trying to convince a potential customer to choose you over a competitor.


Take these tips to improve your customers’ experience and reduce your customer churn rate: 

Exceed Customer Expectations

Nobody likes to be disappointed, especially your customers who trusted you enough to give you their business. Failing to keep a promise and not meeting a customer’s expectations are some of the top reasons for client churn. Making a great first impression and continuously meeting and exceeding their expectations is crucial to avoid losing customers. Customers can leave you just as fast as they found you, so it is essential to meet their expectations consistently.

Provide Great Customer Service

Putting the right amount of effort into your customer service is super important to your customer churn rate. If I ordered a shirt from a company and they sent me the wrong one and neglected my concerns when I reached out, I would no longer purchase from them again, and I think many people would do the same. In the event that your company may not have met a customer’s expectation, providing your customer with the best service and solutions to their issues could be your saving grace and prevent a lost customer—showing your customers that you care about their problems and your relationship can prompt them to give you another chance if you mess up.

Listen to Feedback

One of the best ways to identify customers who may be at risk of churning is to listen to their feedback. For example, listening to a customer’s complaints about your pricing or product quality and taking action if you find that their reason is valid can keep them as customers and reduce churn rates for the future. It is also essential to understand why a customer stops doing business with you if they decide to. Giving them opportunities to express why they left in the form of a small survey or comment field can tell you a lot about your business. If you find most people are abandoning you for the same or similar reasons—fix them.

Some churn rate is inevitable; even Netflix has a 2.5% monthly churn rate. However, if you take these steps to reduce it, you will find that your profits and customer loyalty are increasing.

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