Customer Churn Meaning (And What To Do About It)

You have probably heard the expression “customer churn” a number of times. But do you know what it is?

Customer churn is when an existing customer, user, player, subscriber or any kind of return client stops doing business or ends the relationship with a company.

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This could, for example, mean a cancellation of a subscription, ending of a membership, closure of an account of some sort, not renewing a service agreement or contract and even a customer deciding to buy his or her groceries in another store.

Customer churn is an agonizing reality that affects all businesses at some point. Not even the largest or most successful companies are spared from customers’ defection. It is important for a lasting and sustainable business growth to understand what has caused previously loyal customers and users to abandon ship and find a new provider instead of your business.

Just like most things that can be calculated and measured, it is also possible to do this with your customer churn in a number of ways, so that you can find out:

  • The total number of lost customers within a specific time frame
  • The percentage of lost customer within a specific time frame
  • The recurring business value that is lost
  • The percentage of the recurring business value that is lost

The big question is: How do you reduce your customer churn?

The answer is rather easy: by going the extra mile and doing it right from the start by making a great first impression. If the customer is blown away from the first moment she encounters your business she is less likely to keep looking for something better.

Continue to meet your customers’ expectations and even exceed them whenever you can. The fastest way to lose a customer is failing to deliver, but the better the customer’s first experience with your business is, the stronger their loyalty and commitment will be, meaning the risk of them churning after a while will be significantly lower.

However, sometimes you just have to let some customers go; you can’t keep everybody happy. To decide which ones to let go, you have to keep profitability in mind. Some customers spend more money, rave about your products on social media, and continue to frequent your business for longer. These customers are worth retaining.

You shouldn’t just look to reducing your customer churn rate, but rather should look to reducing your churn while maximizing your profits.

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