Churn
Churn is also known as customer attrition. It’s the percentage of customers or subscribers that stop doing business with a company over a certain period. Businesses especially in subscription-based industries like SaaS, telecom, and media use this metric to measure customer loss.
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Lessons
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Implementing Early Warning Systems
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FAQs
A good churn rate varies by industry but generally a churn rate below 5% annually is good for most businesses. For SaaS industry a churn rate of 5-7% annually is acceptable, above that, it requires attention to customer retention strategies.
Reduce churn by improving customer service, gathering and acting on customer feedback, offering loyalty programs, personalizing experiences, and proactively addressing customer issues before they cancel. Regular communication with customers and offering incentives to stay can also help.
Churn is the number of customers lost over a period, retention is the number of customers that remain over that same period. High retention and low churn signify business success as they mean customer satisfaction and loyalty.
Churn can be classified into two types: voluntary churn and involuntary churn. Voluntary churn is when customers intentionally cancel their subscription or stop using a service because they are dissatisfied or found a better alternative. Involuntary churn is when customers are lost due to external factors such as payment issues or service provider changes that customers can’t use.