What does customer churn mean?

Customer attrition is also called “customer loss” or “churn”. This expression corresponds to the percentage of customers who unsubscribe or stop using a service during a given period. This can be measured in different ways, but generally it means the customer does not renew their subscription or purchase more products from the company. Customer attrition is a recurring problem for many businesses. Attrition can lead to loss of revenue and a need to acquire new customers to replace those who have left.

Calculate customer attrition

There are different ways to calculate customer churn. Here are examples of the most used methods:

Churn rate (or attrition rate)

Calculating the attrition rate is simple to perform:

(number of customers lost / total number of customers at the start of the given period) x 100

Number of lost customers compared to the total number of active customers

The calculation is also simple to carry out and quite similar to the previous one:

(number of lost customers / number of active customers) x 100

Reduce attrition

In order to reduce customer attrition, companies can implement different techniques such as:

• Set up loyalty programs
• Improve customer service
• Quickly resolve customer issues

Loyalty programs

Loyalty programs can help businesses limit attrition. They allow customers to accumulate points or rewards by purchasing products or using services. These points or rewards can be used to obtain benefits, such as discounts or gifts. Loyalty programs can help retain customers by giving them a reason to continue purchasing from the company.

Improve customer relationship management

Quality customer service can help build customer loyalty by providing a positive experience, which will reduce customer churn. Businesses can improve customer service by providing timely and efficient support, answering customer questions and concerns in a professional manner, and providing solutions tailored to their needs.

Respond to issues

If a customer has a problem with a product or service, it is important to resolve it quickly to prevent the customer from becoming dissatisfied and leaving the company. Businesses can implement customer relationship management systems to track and resolve customer issues effectively.

Set up promotional offers

Companies can set up promotional offers, discounts on the products or services they offer. This will encourage customers to stay.