A Wondrous Quick Guide: Measuring and Managing Customer Churn

    manoj matai
    Manoj Matai
    Quick Guide: Measuring and Managing Customer Churn

    A customer’s decision to discontinue using your product or service is calledā€Æcustomer churn, aka customer attrition. Ultimately, they’ve decidedā€Æthey no longer want to be your customers for whatever reason.

    Losing customers can be a costly issue in many industries. The costs of obtaining new consumers are typically substantially higher than those of retaining existing customers. Customers tend to be more cautious with their spending and prefer to buy from reputable brands.

    How can you tell if you’re going to lose business? Furthermore, how do you act before it’s too late?
    Prevent customer churn’s negative impact on operations by measuring, forecasting, and acting proactively. Integrate Customer Support Services to enhance satisfaction, loyalty, and retention. Businesses that do this can keep their revenue streams intact and drastically lower customer churn. Avoid letting customer churn harm your company’s operations.

    How To Measure Customer Churn

    Customer Churn Rate = (Customers lost during the time period Ć· Total customers at the start of the time period) Ɨ 100

    For Example:
    Assume that at the start of the month, you had 1000 customers, and at the end, you only had 800 of those 1000 remaining. This indicates that you lost 200 customers in that time frame. To calculate your multiplicity, divide 200 by 1000. 20% churn rate is a pretty high result for you.
    Depending on your business model, you must determine whether to calculate the churn rate over a monthly, quarterly, annual, or lifetime period.
    Read Also: How to Improve Customer Experience Management Process?

    Causes of Customer Churn

    Customers wonā€™t always stick with you, and there are many reasons for this. Leaving may not always be due to your product or service. Knowing the reasons for customer churn helps you identify customers who are likely to leave, so you can focus on retaining them.

    1. Your level of service is insufficient
    An increasing rate of customer attrition may be a sign of subpar service, so you should assess your front-line staff. Your current customers should also receive excellent customer service; don’t save the best for prospective customers.

    2. You may not be in the right market or product fit
    An unsatisfactory product fit may be indicated by a high customer churn rate. It’s possible that current customers are looking for better deals elsewhere or that you’re aiming for the wrong demographic.
    It can assist in making sure your products are developed appropriately and targeted at the appropriate market. Attracting new subscribers is not enough. Monitor your existing customers’ evolving preferences and ensure you don’t overlook any essential features they rely on.

    3. You don’t have a sufficient understanding of your target market
    You may not always know what your customers want, even if you have been serving them for a while. Some potential customers may be searching for new features you’re not offering, representing a need you’re unaware of. The only way to have a thorough understanding of your target market is to monitor customer feedback and interact with your customers over time to learn what they want. You can reduce your churn rate by paying attention to their requirements.

    4. Your prices are incorrect
    Your customers’ willingness to pay may have changed since they started using your products or services. Customers may feel that your price is too high and decide to leave as a result as the market shifts and rivals challenge your offering. Reviewing your pricing to reflect current market values may be necessary to increase customer retention.
    Read Also: 12 Successful Ways to Maximize the Potential of Customer Service Strategy

    5. Better products or services are provided by your competitors
    Your competitors may simply be more in tune with your target customer base, even if your pricing is competitive. To keep customers, you may need to assess what you’re providing in comparison to your competitors at every stage of the customer journey, not just at first but also as your business grows.
    Because you can start offering features and functions that your customers want and your competitors don’t, you must concentrate on product iteration and new concepts.

    6. The market you sell in is seasonal
    The impact of seasonal markets on the rate of customer attrition can be substantial. A Halloween store may have many new customers in the months before Halloween, but a high rate of customer loss afterward. In such cases, it may be better to calculate the churn rate over a year instead of a month. Then, you can begin to reduce attrition by broadening your current offering to make it more suitable during off-peak times or by developing a new line of products or services.

    7. Your offers of renewals don’t entice customers
    Offering the appropriate offer to customers at the right moment can go a long way toward decreasing customer churn. When it comes time for them to renew a service or product, they may be just choosing, in comparison to other offers, that your renewal offers aren’t enticing enough. Make sure you’re providing something that feels like a good deal because customers pay for value.

    Leverage the next-gen solutions for your digital customer experience

    Importance of Measuring Customer Churn

    The capacity to forecast when a particular customer is highly likely to churn, with sufficient time available to take significant remedial actions, represents a valuable supplementary potential resource for any business.

    • You lose money when customers leave: Beyond just your financial line, a large number of churning customers can have an impact. Determining the best way to bring on new customers will cost money and take time. It’s vital to concentrate on creating wonderful experiences for your current customers because of this.
      The less time and money you have to spend looking for new customers, the happier your current customer will be.
    • Dissatisfied consumers can harm your brand: Even though a churned customer might not always be dissatisfied, you don’t want to take that chance. These days, a dissatisfied customer can use social media to share a bad review and create quite a stir.
      Read Also: What Makes a Good Customer Service? 15 Proven Practices for Good Customer Service


    How to Lower Customer Churn with These Steps

    1. Enhancing CX
    A great customer experience is key to attracting and retaining clients. Investing in this strategy ensures customer satisfaction and loyalty.

    2. Teaching your client
    To provide excellent customer service, give customers the information they need to use your products and services effectively. Offer FAQs, how-to guides, and a strong social media presence for questions and comments.

    3. Giving loyalty a reward
    Discounts and loyalty programs encourage customers to come back to you time and time again. They also help to give you an edge over your competitors. Building a solid reputation for yourself as a provider of loyalty benefits will help your business withstand downturns in consumer spending and attract customers away from competitors.

    4. Acknowledging your most loyal clients
    For the business relationship, certain customers provide more than others in terms of value. It’s important to acknowledge and value your most valuable players (MVPs) to prevent them from leaving.

    5. Paying attention to more than just high-level client feedback
    Although they might not express it to you, there are plenty of signs that a customer may be thinking about leaving. Make sure your listening is multichannel and that your analysis goes beyond the words that are spoken at the surface level. You can tell when a customer is considering leaving by looking at their intent, emotion, sentiment, and driving factors.
    Read Also: Customer Support: The Ultimate Guide

    customer churn examples

    Advantages of Customer Churn

    Losing customers, or customer churn, is typically seen as a bad thing for businesses. Nevertheless, there are some situations where customer churn can be advantageous or helpful:

    1. Identifying Weaknesses: High attrition rates may be an indicator of internal problems in a company, such as subpar customer support, flawed products, or unsatisfactory pricing. Businesses can find these flaws and strengthen their offerings and procedures by looking into the reasons behind customer attrition.

    2. Focus on High-Value Customers: Businesses have valuable and less valuable customers. By focusing on retaining valuable customers, companies can optimize their customers for higher profits due to customer churn.

    3. Market Feedback: Consumers who leave frequently leave insightful comments about their reasons for doing so. This input can provide information about competitive advantages, market trends, and potential improvement areas. Businesses can modify their strategies and offer to better suit the needs and preferences of their churned customers by listening to them.

    4. Opportunities for Innovation: Churn can present chances for uniqueness and creativity. Businesses can create new products or services that better suit the needs and preferences of their customers by studying the reasons behind customer attrition. This will help them draw in new business and lower attrition rates in the future.

    5. Cost Reduction: Generally speaking, gaining new customers is more expensive than retaining current ones. In certain situations, letting go of unprofitable or low-value customers could save the business money. This is especially true if the resources saved from having to service these customers can be transferred to more lucrative parts of the company.

    6. Focusing on Profitability: Churn analysis can help companies retain valuable customers by segmenting their customer base based on factors like churn propensity and lifetime value. This approach maximizes overall profitability by investing resources in the right places.


    Any growing company hoping for steady growth and success must comprehend and handle customer churn effectively. Although tracking this metric may not be the most enjoyable, it provides invaluable insights into customer satisfaction and retention.
    Businesses can find areas for improvement, increase customer satisfaction, and eventually lower churn by accurately measuring and analyzing customer churn rates. Initiative-taking actions, like tailored retention plans and focused customer engagement initiatives.

    Churn rates can be decreased by putting into practice easy-to-implement tactics like monitoring the Net Promoter Score, and Customer Effort Score, and rewarding devoted customers. Furthermore, the implementation of feedback mechanisms and the prioritization of exceptional customer service are crucial measures in preventing customer attrition. Beyond keeping current customers, customer churn prevention offers benefits like chances for development, lower business risk, market segmentation insights, and an advantage over competitors in the sector.

    Prioritizing customer satisfaction and retention enhances JindalX’s reputation, fosters loyalty, and drives sustainable growth in the industry.

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