What is churn?
Churn (sometimes referred to as an attrition rate) is the proportion of customers who stop using your service or product in a certain time frame.
This metric is calculated by dividing the customers lost by the number you started with over a certain period of time (usually during a given month, quarter or year).
It goes hand-in-hand with your Customer Retention rate, so if you have a 10% attrition rate, you’ll have a 90% retention rate, and vice versa.
Calculating churn is key for determining how much ground your sales team needs to cover to offset losses, as well as what your business might be doing wrong (or right) that contributes to a high (or low) attrition rate.
It helps identify whether you’re retaining enough customers in order sustain growth. You can look at the details and see what is causing churn. For example:
- Are customers churning at a specific time?
- What size accounts are more likely to churn?
- Are there patterns that lead to churn?
Once you can answer these questions you can begin implementing customer retention strategies .