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Churn refers to customer loss measured by churn rate, i.e. the number of customers who drop out.
What is churn?
It refers to the term churn rate, or the number of customers who drop out. There are several reasons why customers drop out. A possible cause is that the price is too high in relation to the offer or that the customer no longer wants to use the product or service. On the basis of this churn rate, organizations can properly measure their success.
A high churn rate can have the following consequences. First of all, it may be that the organization makes less profit or even loss due to the high discounts that are given. Secondly, it is possible that the satisfied customers receive high rates on the bill.
How can you prevent churn? First and foremost, make sure your customers are part of your marketing campaigns. You can think of sending newsletters. Secondly, you can reward the loyalty of your customers by sending them discounts, for example. And finally, you can add them to your commercial actions. Think especially about informing if everything is going well.
Calculating the churn rate
You can easily calculate it with the formula below:
Number of customers lost over the period / (Number of customers at the beginning of the period + number of new customers in the period) x 100
Suppose you have 200 customers at the beginning of the period. month. At the end of the month, you lost 20, but gained 30 more. Then the churn rate is 20 / (200+30) x 100 = 8.7%
An average churn rate depends on several factors, such as the type of industry, the number of competitors and how easy it is for the customer to cancel. Nevertheless, the churn rate is usually between 1% and 17%.
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