Churn Rate

With us, your customers are always happy and never stop doing business with you.

Churn Rate

With us, your customers are always happy and never stop doing business with you.

What is a Churn Rate?

Contrary to Employee Turnover, Customer Turnover or Churn Ratio refers to the number of customers that do not conduct future business with you or those that do not renew their subscription after a specific time-frame. Churn Ratio can be often industry dependent, and hence, sometimes it may not be an all-purpose performance indicator, regardless depending on your business model, it can provide valuable insights to improve your Customer Retention proportion. For instance, a higher churn ratio for an e-commerce site may not be a necessarily bad thing. Mostly, because of the nature of their business, i.e. a short buying cycle. Moreover, it can also be attributed to a less user-friendly website that may only require some minute changes.

However, for SaaS industry, the exact high churn ratio can mean something else entirely, again largely because of the nature of their business, i.e. subscription-based User Plans. Therefore, comparatively, for a SaaS business enterprise, analysis of Churn Ratio would be more critical than e-commerce.

How we calculate Churn Rate?

In order to calculate your churn ratio, you have to first identify a specific time-frame in which you want to calculate these churns. Afterward, once you have finalized the time-period, you have to monitor the number of customers that are churning in that duration to effectively calculate your company’s final Churn Ratio. It can be calculated by using following formula:

𝑪𝒉𝒖𝒓𝒏 𝑹𝒂𝒕𝒊𝒐 = Remaining Customers / (Customers at the Beginning+Number of Customers Acquired) ∗100

Calculation of your Churn Ratio in reference to above-mentioned guidelines would generate actionable statistics because now you would know the exact time-frame and customers that churned in that duration. Ultimately, this information would allow you to devise better-targeted strategies to achieve your goals (reduce churn rate) faster.

How it affect revenues?

An increased Churn Ratio is detrimental to your company’s success because it is directly linked to your Customer Acquisition Cost (CAC). To phrase it in simpler terms, if the Churn Ratio is greater than Acquire Ratio than it is time to seriously re-evaluate your business strategy.

Quite many business enterprises in the present-era thrive on the aspect that most of their revenue is generated from recurring customers and referrals they bring in the near-future, rather than on new prospects. So, customers that churn before they could bring any real value to your company in the form of future business opportunities and referrals indicate loss of significant revenue.

Other than affecting your quarterly and yearly revenues, as a whole, churn rate can affect your company as well. For instance, customers that churn before you could even recoup the cost of what it took you to gather & subsequently convert these customers, signifies serious need of consideration regarding your customer acquisition & retention strategy

How to reduce Churn Ratio?

We aim to strive for the best and thus, with our efforts we always neutralize the effect of customers leaving your company by facilitating you in acquiring new customers which in response makes it 2-4% Customer Churn Rate. The most effective way to reduce Customer Churn Ratio is by adopting following elements into your overall Business & Customer Contact Strategy:

  • Personalized Customer Support
  • Tailored Follow-ups & Promotional Emails
  • Loyalty Rewards

Personalized Customer Support

Customers simply adore personalized Support Experience. Moreover, the feeling of personalization is critical to achieving a higher Customer Satisfaction & Retention Ratios, respectively. Similarly, if each session of your site visitors is completely tailored in accordance to their expectations, additionally, the support they will be receiving is fully customized as well based on their past interactions, then chances of such visitors returning to your site again boost significantly.

You can provide personalized Customer Support by using contemporary tools like Customer Relationship Management (CRM) Solutions that allows you to store each customer interaction data in order to analyze it and enhance your support capabilities later alongside a consistent Customer Support Channel that corresponds to your customers taste to offer a more relevant Support Experience to your customers.

Focusing on improving your Customer Support capabilities will where, provide you the feasibility to decrease your churn ratio, will additionally offer you invaluable customer data to use in your subsequent efforts to further decrease customer churn ratio by acquiring new prospects as well.

Tailored Follow-ups & Promotional Emails

t’s painfully simple if you forget about your customers; chances are they will forget about you too. In the contemporary age, customers want to build a long-lasting relationship with a business enterprise but only if the concerned enterprise is able to meet their constantly varying expectations.

Due to this, in the current business environment, relevant follow-ups matter a lot. For instance, by changing your approach & sending fully customized emails in response to each customer purchase, i.e. something like the name of customer and a simple “thank you for purchasing item x” or “thank you for subscribing” message along with suggestions of other similar products/services based on that customer’s session on your site or based on their past interactions, you can increase customer return ratio & decrease customer churn ratio, effectively. Aside from this, you can send your customer emails pertaining to any upcoming sale (based on their preferences) or event to make them realize that you care about them, thus, increasing their satisfaction & retention ratio accordingly.

Loyalty Rewards

Customers have always loved rewards and as a result, presently loyalty awards have become an incredible way to retain your customers. This approach is being used by a variety of companies belonging to a variety of industries, mainly because loyalty programs are pivotal to retention marketing and also because this methodology has been successful so far. An example of Loyalty Rewards is that you can assign points to each customer based on their every purchase, which they can later claim (after a certain required limit, i.e. 500 rewards points) to buy some of your products or services totally free of cost.

Loyalty programs are great; however, to increase your proficiency level one step further in terms of decreasing customer churn ratios, you can use it in conjunction with tailored followups & personalized Customer Support to attain even better ratios.

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