What Is Customer Churn? [Definition] - HubSpot Blog

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Customer churn is the percentage of customers that stopped using your company's product or service during a certain time frame. You can ... WhatIsCustomerChurn?[Definition] DownloadHubSpot'sFreeChurnandRetentionCalculator DownloadNow SwethaAmaresan Updated: November05,2021 Published: February16,2021 Customerchurnisoneofthemostimportantmetricsforagrowingbusinesstoevaluate.Whileit'snotthehappiestmeasure,it'sanumberthatcangiveyourcompanythehardtruthaboutitscustomerretention. It'shardtomeasuresuccessifyoudon'tmeasuretheinevitablefailures,too.Whileyoustrivefor100%ofcustomerstostickwithyourcompany,that'ssimplyunrealistic.That'swherecustomerchurncomesin. WhatIsCustomerChurn? Customerchurnisthepercentageofcustomersthatstoppedusingyourcompany'sproductorserviceduringacertaintimeframe.Youcancalculatechurnratebydividingthenumberofcustomersyoulostduringthattimeperiod--sayaquarter--bythenumberofcustomersyouhadatthebeginningofthattimeperiod. Forexample,ifyoustartyourquarterwith400customersandendwith380,yourchurnrateis5%becauseyoulost5%ofyourcustomers. Obviously,yourcompanyshouldaimforachurnratethatisascloseto0%aspossible.Inordertodothis,yourcompanyhastobeontopofitschurnrateatalltimesandtreatitasatoppriority. Inthisexample,Icalculatedthechurnrateasthepercentageofcustomerslostthatquarter.However,youcancalculatechurnrateinwhateverwayisbestforyourcompany.Someexamplesare: Thenumberofcustomerslost Thevalueofrecurringbusinesslost Thepercentageofrecurringvaluelost WhyIsCustomerChurnRateImportant? Youmaybewonderingwhyit'snecessarytocalculatechurnrate.Naturally,you'regoingtolosesomecustomershereandthere,and5%doesn'tsoundtoobad,right? Well,it'simportantbecauseitcostsmoretoacquirenewcustomersthanitdoestoretainexistingcustomers.Infact,anincreaseincustomerretentionofjust5%cancreateatleasta25%increaseinprofit.Thisisbecausereturningcustomerswilllikelyspend67%moreonyourcompany'sproductsandservices.Asaresult,yourcompanycanspendlessontheoperatingcostsofhavingtoacquirenewcustomers.Youdon'tneedtospendtimeandmoneyonconvincinganexistingcustomertoselectyourcompanyovercompetitorsbecausethey'vealreadymadethatdecision. Again,itmightseemlikea5%churnrateissolidandhealthy.Youcanstillmakeavastrevenuewiththatchurnrate.However,considertheexamplebelowwhenthinkingabouttheimpactofyourchurnrate. Source:ChurnRate Inthisexample,simplydecreasingyourchurnrateby10%couldaddanextra$100,000inrevenuetoyourcompany.Droppingfrom3%to2.7%doesn'tseemlikealot,butitactuallyaddslargebenefitstoyourcompany. Youcanhelpreduceyourcustomerchurnandsustainitinseveralways.Formoretips,checkoutthispostonhowtoreducecustomerchurn. HowtoReduceCustomerChurn 1.Focusyourattentiononyourbestcustomers. Ratherthansimplyfocusingonofferingincentivestocustomerswhoareconsideringchurning,itcouldbeevenmorebeneficialtopoolyourresourcesintoyourloyal,profitablecustomers. 2.Analyzechurnasitoccurs. Useyourchurnedcustomersasameansofunderstandingwhycustomersareleaving.Analyzehowandwhenchurnoccursinacustomer'slifetimewithyourcompany,andusethatdatatoputintoplacepreemptivemeasures. 3.Showyourcustomersthatyoucare. Insteadofwaitingtoconnectwithyourcustomersuntiltheyreachouttoyou,tryamoreproactiveapproach.Communicatewiththemalltheperksyouofferandshowthemyoucareabouttheirexperience,andthey'llbesuretostickaround. Formoreinformation,checkoutthispostontheimportanceoflisteningtocustomers. Topics: CustomerRetention TicketingSystem Don'tforgettosharethispost! RelatedArticles previous next 15SaaSCustomerRetentionStrategies(ThatActuallyWork) HowtoRetainCustomers&BeatChurninTimesofInflation[ConsumerData] 25CustomerServiceEmailTemplatestoSupport,Renew,&RefundCustomers HowtoCalculateCustomerLifetimeValue Here’sWhyCustomerRetentionisSoImportantforROI,CustomerLoyalty,andGrowth 12VoiceoftheCustomerMethodologiesToGenerateaGoldMineofCustomerFeedback WhatisAbandonmentRate?[&7WaysYouCanImproveIt] WhatIsaRetentionSpecialist?(AndWhyTheyMatter) 10CustomerRetentionMetrics&HowtoMeasureThem HowtoLetCustomersKnowAboutaPriceIncrease(WithoutMakingThemMad) Join64,500+Customer-FacingProfessionals ThanksforSubscribing! Close Getexpertinsightsstraighttoyourinbox,andbecomeabettercustomersuccessmanager.SubscribetotheServiceBlogbelow. Close We'recommittedtoyourprivacy.HubSpotusestheinformationyouprovidetoustocontactyouaboutourrelevantcontent,products,andservices.Youmayunsubscribefromthesecommunicationsatanytime.Formoreinformation,checkoutourPrivacyPolicy. PopupforFREECUSTOMERSERVICEMETRICSCALCULATOR FREECUSTOMERSERVICEMETRICSCALCULATOR FREECUSTOMERSERVICEMETRICSCALCULATOR CalculateyourNPS,CSAT,CAC,andmoreforfreewiththiscalculator. DOWNLOADFORFREE DOWNLOADFORFREE

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