Churn Rate

“Churn” is when a customer cancels their subscription to your service or stops buying from you. “Churn rate” is the percentage of those customers in proportion to the total number of customers you’ve got in a certain period. Once you’ve found your churn rate, you can start testing new strategies to reduce it and increase your revenue.

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How can I find my churn rate?

The math isn’t too tough. Just define a time period, then determine the number of customers you had at the beginning of that period and the number of customers that you lost by the end of that period. Once you have those numbers, follow this formula:

(Lost Customers ÷ Total Customers At The Start) x 100 = Churn Rate

Let’s use an example to make it a little more tangible.

Say you have 10,000 customers for your bonsai tree subscription service in the month of September. In that same month, you lose 2,000 customers to cancellations. By using the formula…

(2,000 ÷ 10,000) x 100 = 20%

… we can determine that your churn rate is 20%.

How can I reduce my churn rate?

Most customer churn happens because of the following:

Low Perceived Value: Your customers don’t feel like the value they’re getting from your product or service is worth the price you’re charging.
No Brand Loyalty: Your customers don’t feel like you care about their experience with your product or service.
Bad Customer Service: Your customers don’t feel like they can get help when they need it.

So what can you do to reduce churn? Improve the customer experience! Here are a few strategies you can try out in your business:

Improve your onboarding process.

If you’re selling physical goods, this could mean following up with new customers through email, offering incentives to get them back to your store, or including a personalized message with their delivery thanking them for buying.

If you sell a service, you might spend time on the phone with new customers to show them how they can get the most value from their investment. Or, give them access to ebooks, videos, and tutorials that help them achieve their desired outcomes. Or, check in with them regularly after the purchase to make sure they don’t have any unresolved issues.
Create a customer-centric culture.

Be proactive about helping your customers. Use surveys to collect feedback and find blind spots in your business. Make it easy to contact – and get answers from – customer support. Send updates about new products, features, or services that your customers could benefit from. And offer a personalized experience so each individual customer feels heard.
Optimize customer service.

Monitor your customer service KPIs like average response time, average resolution time, and customer satisfaction score. When you know your numbers, you can implement new strategies to improve them. Hiring more agents is a good way to improve your KPIs, but if you’re looking for an easier solution, check out how Coveo can optimize the entire customer journey..