Churn – What is it, definition and concept | 2022

Churn is a specific metric that is responsible for measuring the number of customers who have stopped following a company. This means that they no longer consume the products or services you offer.

The churn provides data on customers who are no longer with the company. It is about the cancellation or abandonment that they make in relation to the services of a brand. That is reflected in the database.

To mention a few examples, churn reflects the fact that some customers are no longer subscribers to a blog, or no longer use the brand’s services for an extended period of time.

In more technical terms, this indicator is called churn rate or cancellation rate.

A business not only lives by making customers, but, to achieve the desired success, it is necessary that they are retained. That means that the relationship with them is forged in the long term.

For this reason, it is important to have a metric that informs the company of the number of customers who no longer buy their services.

It will be necessary to have certain tools to be able to effectively see the history of purchases made by customers. In addition, it must be controlled if they unsubscribe from the newsletter. This is another of the things that can be found out to find out in depth the reasons why the brand is not retaining them correctly.

How is churn rate calculated?

There is a formula to calculate this metric that is very useful for companies. In this case, the following should be carried out:

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Churn=those customers who canceled services during a month / customers that exist at the beginning of the month x 100.

With this, the rate will be obtained to later assess the data it throws and know the number of customers who are leaving the company.

How can you improve the churn of a business?

There are a few essential things to keep in mind that will go a long way in preventing customers from leaving:

  • Know the reasons for the cancellation: Knowing the figure is very useful, but it is important to know the reasons that lead customers to stop using a company’s services. To do this, the team responsible for this area must sharpen their senses and obtain data beyond a simple number. For example, if they unsubscribe, carry out a questionnaire, contact customers to inquire about it and assess possible errors that are being made to encourage user cancellations.
  • Get to know each client in depth: There may be a situation where some customers are more likely to leave the company. It is relevant to identify them, since it is possible to offer a more personalized attention to them and offer other possibilities to retain them.
  • Designate a team specialized in this topic: Metrics can report interesting data and fulfill their function, but it is better to anticipate and offer solutions so that customers do not stop using the services and options offered by the company. Building a team to handle these tasks will help you act quickly on customers and anticipate issues as they arise.
  • Clients must be heard: If we start from the idea that customer retention is vital for the proper functioning of a business, we will have to listen to customers to find out if they are satisfied with the service. Many times, due attention is not paid to these and the aim is only to get them to buy, but dedicating time and resources to effective customer service will provide valuable information to prevent them from leaving.
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Marketing and advertising are vital for a company, as well as other tasks of this, but to improve the churn rate and avoid massive customer abandonment, the attention that must be given to these must be satisfactory so that they remain attached to the brand. .

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