How to Improve Customer Churn Rate and Increase Revenue

Customer Churn Rate | QaizenX

Customers can be a fickle bunch—satisfied one day, gone the next. That’s why it’s critical for companies of all shapes and sizes to reveal when clients leave or “churn.” While customer churn rate is mostly taken into consideration to be a measure of failure instead of success, it’s one of the most important metrics to track. (In any case, what’s a business without its clients?) Churn also impacts nearly every aspect of a company, from the product and sales to customer loyalty and customer satisfaction.

What’s the customer churn rate?

Customer churn rate, also known as attrition rate, is one of the important business metrics, – customer satisfaction metrics that calculate the rate at which customers leave a product over a given time frame. Customer churn rates are important to understand the health and stickiness of a business, as a high churn rate causes a high revenue churn rate and hurts your business’ bottom line. The better the churn rate, the more customers your business is dropping.

Reasons for customer churn

Before we discuss actionable guidelines and techniques, we should focus on the root cause of consumer churn. Here are four:

1. Poor Customer Service

In today’s pretty competitive business surroundings, customer demand is on the spot and top-notch customer service. Many companies overlook regard customer service as one of the most vital components of their augmented product. Customer service is a massive contributor to user satisfaction and is regarded as the primary reason companies lose their customers. Seventy-eight percent of millennial customers have moved their business somewhere else after one single poor customer service experience.

That is why poor or mediocre customer support leads to customers forsaking the service or product. In a few instances, they will also leave a bad review before or when they go away, which can also have the action of your other customers or potential customers.

2. Poor Onboarding Process

There are two key moments in the onboarding approach. The first one is while your consumer signs up for the service or product. And second is when the consumer achieves their first success with the services or products.

Most of the customer churn rate happens between those two key moments, i.e. when the consumer has signed up for the services or products but fails to see the value or advantage in a certain period. This often occurs due to the difficulty of the customer onboarding procedure, that’s wherein clients first begin having an immediate relationship with your brand.

3. Lack of Ongoing Customer Success

Customer success has to do with the non-stop efforts of a company to deliver value to its clients. Every service or product should add value to a customer’s life that is the purpose why he/she is buying or subscribing to it.

In case your company fails to deliver on the promises that come with buying a product or service, the customer lifetime value will drop down. Moreover, it’ll also contribute to a decrease in overall customer satisfaction, which will ultimately lead to customer churn. Here is a secret to customer experience success.

4. Lack of Brand Loyalty

When customers develop brand loyalty towards your company, they’re more likely to spend more money or refer their friends to do the same.  Referred customers cost far less and require much less attempt to acquire than regular customers. 

Brand loyalty is typically only instilled after the second key moment, i.e. after the client has reached his/her first success with the services or products. Before this point, the capability costs for switching to some other products or services company are very low, for this reason making it much less tough for them to churn. This again emphasizes the significance of appropriate onboarding and ongoing customer support.

Calculating your customer churn rate

Generally, while speaking about churn you’ll hear someone consult with their “customer churn rate.” to calculate your customer churn rate you need to first define a selected period. It could be every week, a month, or more. 

After you’ve described your period you are taking the number of clients that churned and dividing that by the total number of customers you had at the beginning of the period.

So, in case you started with 100 customers, however, lost five, you’d have a churn rate of 5%. This means that over that time frame only 5% of your customers churned. The real equation could seem like this: (5/100) x100 = 5

For another example, let’s say you started with 500 customers at the start of the month but lost 35 over the month. The equation might be (35/500) x100. If so, you’d have a monthly churn rate of 7%. 

Here is the equation with no variables stuffed in so you can plug it into your numbers:

Why is consumer churn essential?

Understanding your customer churn rate is vital in evaluating the effectiveness of your marketing efforts and the overall satisfaction of your clients. It’s also less complicated and cheaper to hold on to clients you have already had versus acquiring to obtaining new ones. Because of the popularity of subscription business models, it’s critical for many businesses to apprehend which, how, and why their customers may be churning.

The way to prevent customer churn rate:

Now that we’ve covered what churn is and the way to calculate it, we’re going to speak approximately a few ways you may reduce churn at your organization. Every industry can be different but most should discover something relevant below:

1. Watch the marketplace –

Have you ever noticed how industries have trends? For instance, when smartphones first came out it seemed they had been all priced at approximately $200. So when something was priced above that it seemed very high priced. That tool could need to provide something super unique to justify the cost. It had to prove that the value becomes there. 

Check out the customer experience trends you need to know in 2022.

Any service or product you sell follows the equal rules. Even though someone loves your product, if they understand that the cost isn’t worth the value it brings, then they may start purchasing around for special alternatives. Now, we’re not pronouncing which you want to price-match everyone on your space. What we’re pronouncing is that if you’re the most costly you do need to have a robust case as to why.

2. Invest in Customer Education –

How many people do you know that own guitar? Now, how many people do you know to play the guitar? The number might be quite distinct. Infect, 90% of people who purchase a guitar don’t beyond one year. However, fender observed that the 10% that continued playing can also spend as much as $10,000 in their life on guitars and associated accessories.

Though your product might be easier to learn than an instrument. There will still be an element of a learning curve concerned. If a customer is discouraged early and not able to accomplish the task they wanted to with your product. Chances are they received to retain the use of it in the future and you’ll lose their business. Investing in education alternatives like help center articles and online tutorials means customers may have a better chance to be successful with your product. And be much less probably to leave.

3. Search for Trends –

While you analyze your churn data you can start to notice that most of the people leave within a certain timeframe. Or, possibly you see that once a patron uses a certain feature or service that they are less likely to churn. Those styles of actionable insights are useful. 

To use them to your full gain, you need to go a step at a time and see if you could parent out why the matters are going on. As many math trainers have stated, correlation does not equal to causation. So, be curious and dig in deeper to examine even more about your customers and what can be motivating them.


Remember that to measure churn you need to first define a period. Then you definitely will take the range of customers lost over that time. And divide it by using the total number of clients at the start of the period.  Though there’s no silver bullet to stop customers from leaving there are a few things to recollect. Enhancing your customer’s experience is the most important factor in customer retention. Make sure you’re retaining up with the market. If your price and value don’t align, then it can cause trouble.

Investing in teaching customers, that when they can achieve success with your product. They’re more likely to stick around, and last, be curious about the data you accumulate. Look for trends and dive deeper to recognize them.  You won’t be able to keep every purchaser you attract.

It’s a fact of business and one that you’ll need to prepare for. Even though it’s a far inevitability, you can take measures to decrease those instances. Using a prolific customer experience management software like QaizenX helps effectively in reducing customer churn rate.

Speak to our experts about deploying Customer surveys to help you improve customer experience and grow your business.

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