All you need to know about Customer Churn

What is Customer Churn?

Customer churn, also known as customer attrition, customer turnover, or customer defection, is the loss of clients or customers. It occurs when customers or subscribers stop doing business with a company or service. Customer churn is calculated by the number of customers who have stopped using your company’s products or services during a given time period.

Churn rate is calculated by dividing the number of customers you lost during a time period, by the number of customers you had at the beginning of that time period. It shows how your business is doing with keeping customers by your side. Churn rate can be calculated in whichever way is best for your company. You can do it by measuring the number of customers lost, the value of recurring business lost or the percentage of recurring value lost.

Why does Customer Churn matter?

It is important because it costs more to acquire new customers than it does to retain existing customers.  In fact, an increase in customer retention of just a small amount can create a substantial increase in profit. This is because returning customers will likely spend more on your company’s products and services.

You do not need to spend money and time on convincing an existing customer to select your company over your competitors because they have already done so. There is a direct relationship between the ability to grow your business and customer lifetime value. The higher your customer churn rate, the lower your chances of growing your business. Your business will suffer if you lose customers at a high rate, as the cost of acquiring new customers is pretty high.

What causes Customer Churn?

There are lots of issues that can lead customers to leave your business, but there are a few that are considered to be the leading causes of customer churn. One of the main causes is poor customer service. A lot of customers have abandoned a business due to a poor experience. We are living in the era of the customer, and customers are demanding good customer service and experiences.

When they don’t receive it, they will go to your competitors and share their negative reviews on social media. Therefore this one customer who had a poor service experience can result in many more customers churning. Some of the other causes of customer churn include a poor onboarding process, natural causes that occur for all businesses from time to time, a lack of ongoing customer success, a lack of value, low-quality communications, and a lack of brand loyalty.

Ways to reduce Customer Churn:
1) Analyse why the churn occurs:

Before you tackle a problem, it is very important to identify the cause. You have to simply find out why your customers decided to leave. The best way to do this is to talk to the customer. You can call the customer or send them a personalized email. Talking to your customers over the phone is a great way to show them that you really care. You can call and ask them why they left which will help you in analyzing churn. Surveys are also a good method for collecting feedback from customers who have closed their accounts. You can send them surveys via email or let them complete surveys on your website.

2) Engage with and educate your customers:

Actively engaging your customers with your product is a way to prevent churn. Give your customers reasons to keep coming back by showing them the day-to-day value of using your products providing ample and versatile content about the key functional benefits of your product and offering regular news updates. Also, don’t forget about the good-old feedback. You need to ask your new customers what their first impression of using your product was. This feedback will help you better understand the impact that your products are making.

You have to provide your customers with good quality educational or support materials. This will help increase retention and reduce churn. You can offer free trainings, video tutorials, and product demos to make your customers feel comfortable and informed.

3) Provide better services:

Providing better service is the most obvious method of keeping customers by your side. Poor customer service is the leading case of customer churn. The main reasons why customers leave the company are unbearably slow service and incompetent and rude staff. You should make sure that you provide the best in class customer service that makes customers happy. If you reach out to your customers before they need you, you are showing them that you are invested in helping them get the most out of your product or service.

4) Offer incentives:

Give customers a reason to stick around by offering them incentives, such as discounts and special offers. Offering incentives and discount offers is one of the most effective strategies for reducing churn. These small efforts can go a long way when it comes to showing your existing customers how much you value them. But before doing this you have to be sure that the costs of your retention program do not outweigh the profits to be gained from the customers you intend to save.

5) Pay attention to feedback:

A customer’s frustration can ultimately lead to customer churn. Issues surface when there is confusion around a product or service or lack of effective support around a particular issue. Feedbacks or complaints suggest that the bigger part of the problem is hidden from the view. Getting to the root of the specific issues plaguing your business requires you to take the time to collect feedback early and often. Dissatisfied customers whose complaints are attended to are more likely to remain loyal, and even become advocates, than other average customers.


Organizations are equipped to determine their customer retention success rates and identify strategies for improvement by being aware of and monitoring churn rate. We at Quantazone will help you to build stronger relations with your customers with some of the best CRM tools.

Share on linkedin
Share on facebook
Share on twitter
Share on whatsapp

It's time to grow with digital marketing