What is churn rate?

What is churn rate?

The churn rate determines the number of customers who no longer use your product or service within a certain period of time, and The churn rate determines the number of customers lost in a given period is obtained by dividing the number of customers who first have this period. The customer churn rate is usually determined by the percentage, but the customer churn rate can also be understood by calculating one of the following four criteria.

  • The number of customers lost in a given period
  • Percentage of customers lost in a given period
  • The amount of monthly recurring revenue (MRR) you lose.
  • Percentage of MRR that you lose.

The customer churn rate is a key factor in determining the growth of your business and The customer churn rate gives you a clear view of customer retention that is an important factor in determining the success of your company.

What causes customers churn?

There are many reasons why customers of another company do not use the product or service, but there are a few general reasons that usually cause customer churn and increase churn rate.

The first reason churn rate could be poor customer service. According to research, nearly 90% of customers who have left another company’s product or service are dissatisfied with the services provided to the customer.

A company’s customers want exceptional services and experiences, and if they don’t get it, they turn to rival brands and share their negative experiences on social media. Studies show that 59% of people between the ages of 25 and 34 share their bad experiences with using a brand online. Therefore, providing low-quality services and bad customer experience In addition, it increases the churn rate ,can cause a large number of customers to lose.

Other reasons for customer churn rate can be the customer’s failure to achieve their goal, poor customer relationship, lack of a reputable brand, low capital, or natural causes such as employee change that may occur to any company.

11 practical ways to reduce customer churn rates

1- Get to know your customers

The best way to prevent a company from customer churn is to get to know their customers well. By having the right insight into customers by using Big Data and having a customer database, companies can anticipate customer needs and try to fulfill their expectations. This process also involves identifying customers who are at risk of churn and trying to improve their satisfaction.

2-Focus on your profitable customers


Churn rate

Many companies think that in order to reduce customer churn rates, they need to think about returning all the customers who are abandoning their product or service. However, according to Gupta, a professor of business management at Harvard University, companies should focus only on those customers who are more profitable, using solutions such as phone calls, email marketing, or promotional packages that they think of. Most importantly, encourage your important customers to reuse your product or service.

3-Be active in communication for reduce churn rate

By communicating with your customers before you need them, you are helping them maximize the use of your product or service and not increase your churn rate.; But every type of message, in this case, will not be useful. The type of message or resource you send them should be directly related to their use of the product or service.

As an example, if someone registers for your product or service and you notice that they are not using all the features of your product or service that is available to them, you should mention these features to them. Your customers may be more eager to use all of your products or service.

4-Define a roadmap


Define a roadmap for your customers

Using a new product or service may be difficult for a customer at first, and if the customer can’t easily use that new product or service and can’t figure out how to find his or her needs, his or her willingness to use will soon decrease. You need to provide a roadmap for your new customers and guide them through the features, capabilities, and process of using your product or service, and teach them how to use your product or service.

Customers who hope to achieve their goals with the help of a company’s product or service are less likely to abandon the use of that product or service. Therefore, you should always monitor the roadmap of your product or service and remove obstacles and problems To prevent customer churn rate.

5- Motivate your customers for your customers to avoid churn

Give your customers a reason to keep working with your product or service. This incentive can be a discount or a loyalty program. This little effort will show your customers how much you care about them.

Motivation should be given to each customer at a specific time to have the greatest impact on him; For example, when a customer’s contract is coming to an end and you are worried that he will not renew his contract, this is the best time to offer him a discount. By doing so, you encourage him to renew his contract.

Another thing to consider when motivating your customers is their needs. If you anticipate that a customer will feel that your product is not useful to them and may no longer use your product, you should introduce them to one of the features of your product or service that fits their goals.

6- Always ask your customers for their opinions


Always ask your customers for their opinions

Customer frustration, which ultimately leads to the settlement of the customer’s account, usually occurs when there is confusion about a product or service or effective support for a particular issue. To prevent this from happening, you should always get feedback from your customers and resolve it if there is a problem for them.

Surveys show customers that you are committed to progress and would like to improve your product or service.

Receiving feedback from customers can be through survey forms, sending emails, ranking, or chatting online.

7- Create loyal customers for yourself so that your churn rate doesn’t increase

Make your customers loyal by sending them personal e-mails or other methods. Because loyal customers of a company are less likely to abandon the use of the product or service, and this will cause you to have the opportunity to make a mistake. Unprecedented events may happen to any company, in which case only loyal customers may give you a chance to solve problems.

learn more about personalization

8- Always be competitive

Market conditions are constantly changing. With the introduction of new software or technology to the market, the needs and demands of your customers will inevitably change. You need to make sure that you don’t just lag behind the changes in the market, but also go ahead and make a big difference in the industry. Have at least one unique feature that sets you apart from others and has a clear competitive advantage for you. In fact, your customers need to believe that if they don’t use your product or service, they will miss it.

9- Know your weaknesses and keep your churn rate to the lowest possible level

You can’t fix the disadvantages of your product or service until you know them. If you don’t work on these weaknesses or solve new problems that appear suddenly; You may face bigger problems. Some common problems with Windows users were spyware, malware, viruses, and freezing. Microsoft has outsourced the virus to third parties such as McAfee and Norton. Therefore, only customers who were familiar with these products used them. On the other hand, Apple has launched its products with high security. This was a big victory for Apple and it gained a lot of market share. Many lost their customers before Microsoft fixed its weaknesses.

10- Thank your customers for reduce churn rate


Thank your customers

To reduce customer churn rate, you need to determine how much you value and appreciate them. Make your customers loyal with your product or service by thanking them. As an example, you can talk about them on your social media pages, or post their comments about one of your blog posts.

11- Understand what is the reason for customer churn

If you don’t know the reason for customer churn, how can you improve your churn rate? Many companies ask customers why they didn’t use their product or service anymore. By analyzing this information, you can better understand your customer and your business and make the necessary adjustments accordingly.