What is customer churn?

Customer churn is a customer loss percentage that can happen across any business model and can be the result of many variables from both inside and outside organisational influences. The key to managing customer life cycle and avoiding churn is, understanding the drivers behind why a customer might terminate the relationship. The reasons can vary considerably between industries and organisations and it is often not always immediately evident.

Each company must do their own deep dive analysis into possible causes, that may need to be broken down even further into departments.

Some common causes of churn may be related to tangible or intangible factors, such as:

  • Quality concerns
  • Pricing concerns
  • End of life (EOL) for product, software or license agreement
  • Expectations not being met
  • More suitable or preferred competitive offering
  • Unclear messaging or confusion over product or service, may not know full service offering 


How reducing customer churn can improve bottom your bottom line

Time and resources are valuable and we must make smart, educated decisions on what, how and who we dedicate our energy to.

If your customer churn rate is higher than 10%, then even if you bring on 10% new business, you’re not going to be able to grow. In fact, you’ll be burning money on marketing and customer acquisition costs so the reality is you’ll be killing your bottom line. (Source: ClientHeartBeat)


Calculate your customer churn rate

Use this simple calculation below to work out your customer churn rate.

Customer Churn


Using data analytics to minimise customer churn

With access to modern technology it is now possible to eliminate the guess work of cause for churn. By monitoring customer data we can efficiently and affectively determine behavioural triggers and react appropriately to the customers needs, in most cases extending the customer life cycle. The challenge is knowing the right data to look at and accurately analysing and taking action within the appropriate timeframe.

A reliable marketing automation platform provides insight into customer interaction across all communication platforms (website, social media, email and phone logs). You can then determine what content and topics your customers are interested in so you can nurture and provide the right material to continue engagement and educate on new products.


Maximise growth with data analytics

Once you have stabilised your customer churn rate you can improve business performance by taking analytics a step further to anticipate your buyers needs. By knowing the right data to track and analysing data over longer periods of time BIG DATA can provide you with detailed insights into buyer patterns. This is where you can start to really add value to customers by using PREDICTIVE ANALYTICS to anticipate your customers wants and needs, providing a better product and service.




It’s important to compare revenue churn with customer churn

Even though customer retention is extremely important and the value of protecting existing customers is high, there are still some situations where it is smarter to walk away from a sale or existing relationship. If it is not a good match for your core business or is too demanding on your teams time then it may be time to assess whether it is profitable or detracts from being able to service more financially viable customers. As hard as it is, then it can make sense to not enter into or to end existing partnerships that are not aligned with your overall long-term business goals.