Churn

What is churn?

Churn represents the percentage of customers who have terminated their subscription, canceled a service, or ceased purchasing from a company within a given timeframe.

To calculate churn rate, you need two pieces of information:

• The number of customers or subscribers at the beginning of a given period (Starting Customers).
• The number of customers or subscribers who churned during that same period (Churned Customers).

The formula for churn rate is as follows: 

Churn Rate = (Churned Customers / Starting Customers) x 100

The churn rate can be calculated over different timeframes such as monthly, quarterly, or annually, depending on the specific needs of your business. It provides a useful metric for tracking customer attrition and evaluating the effectiveness of retention strategies.

Why is churn important?

Сhurn analysis allows businesses to identify and address factors that contribute to customer attrition, leading to improved customer retention, increased revenue, and enhanced competitiveness in the market. It helps businesses focus on retaining their existing customers and building long-term relationships, which is often more cost-effective and beneficial compared to acquiring new customers.

What tools help track churn?

• Customer Relationship Management (CRM) Software. CRM tools like Salesforce, HubSpot, and Zoho CRM enable businesses to manage customer data, track customer interactions, and monitor customer engagement. They provide a centralized platform to track customer information, including churn-related data, and generate reports and analytics.
• Analytics and Business Intelligence Tools. Tools like Google Analytics, Mixpanel, or Amplitude can provide insights into customer behavior, engagement metrics, and user journeys. They allow you to track customer interactions, identify drop-off points, and analyze conversion and churn rates based on data-driven metrics.
• Customer Feedback and Survey Tools. Tools such as SurveyMonkey, Typeform, or Qualtrics enable businesses to collect feedback from customers through surveys, questionnaires, or feedback forms. By gathering feedback from churned customers, you can gain insights into their reasons for leaving and identify areas for improvement.
• Customer Success and Retention Platforms. Customer success platforms like Gainsight or Totango help monitor customer health scores, engagement levels, and provide proactive customer success management. These platforms often include churn prediction capabilities and features to track and manage customer retention efforts.
• Email Marketing and Marketing Automation Tools. Tools like Mailchimp, ActiveCampaign, or Marketo can assist in tracking customer engagement through email campaigns. By monitoring email open rates, click-through rates, and conversions, you can identify customers who are disengaging and take appropriate actions to mitigate churn.
• Custom-built Analytics and Reporting Systems. Some businesses develop their own in-house analytics and reporting systems tailored to their specific needs. This can involve data integration, custom dashboards, and advanced analytics capabilities to track churn and analyze customer data effectively.