Customer churn, often referred to simply as “churn,” is a business metric that measures the rate at which customers or subscribers discontinue their relationship with a company during a specified period. It is a critical metric for assessing customer retention and loyalty and is typically expressed as a percentage.
The formula for calculating customer churn is as follows:
Churn Rate =
(( Number of Customers at the Start of the Period − Number of Customers at the End of the Period) / Number of Customers at the Start of the Period) X 100%
Churn rates can vary widely across industries and businesses. Lower churn rates are typically seen as a positive sign, indicating strong customer loyalty and a stable customer base. High churn rates, on the other hand, may signal problems with customer satisfaction, product quality, or competitive pressures, and they require attention and action to mitigate their negative impact on a company’s bottom line.
More Customer Churn Resources for Call & Contact Centers
If you’re not retaining your customers, you’re losing money. Understanding your customer churn rate one a key part to keeping long-term profits. In this episode of LiveVox’s CX Reflex Series, CX sage Lynne Hunsacker discusses what customer churn is and how to calculate it, as well as what factors can lead to high churn rates. Most importantly, she talks about how to fix a poor customer experience before it’s too late!
Customer experience management is the key to growing customer loyalty and boosting revenue. Creating the best customer experience takes some work. But the right CXM software makes it much easier. Check out the key benefits of using the right CXM software:
Improved employee productivity: Enable your agents to help customers better with chat automation and real-time customer data.
Streamlined business decisions: With data collection and visualization across channels, key decision-makers can quickly run reports and access the right information. This information helps your team make better decisions and improves company performance overall.
Increased competitive advantage: By significantly improving operational performance, CXM software helps to reduce customer churn and increases customer satisfaction. It also helps to decrease service costs
Customer service software is typically broken into three categories: on-premise, cloud-based, or hosted. Each of these options has its own set of benefits and drawbacks. Cloud-based contact centers are quickly becoming the most popular solution. This type of software provides mobility, lower upfront costs, and data security.
Across the board, customer service software saves your business money in the long run by reducing customer churn and cutting IT administration costs. Be sure to weigh all your options and choose the option that’s best for your company.