What is Churn, How to Calculate it, and How to Prevent it in 3 Ways

What is Customer Churn Rate?

How do You Perform a Churn Rate Calculation?

  1. Identify the number of customers you lost last quarter.
  2. Divide that number by how many customers you started with last quarter.

What’s another Churn Rate Formula?

1. Gross Revenue Churn Rate

  1. Identify the total amount of revenue lost during a specified period of time (a month, quarter, or year).
  2. Divide that number by how much revenue you started with in that specified period of time.

2. Net Revenue Churn Rate

  1. Identify revenue lost during a specified period of time (a month, quarter, or year).
  2. Identify revenue gained from existing customers during that time period (from higher subscription rates, upsells, etc.).
  3. Subtract revenue lost from revenue gained and divide that number by total revenue at the beginning of the specified time period.

How Do You Reduce Churn?

Create a Better Customer Onboarding Process

Listen to Customer Complaints

Give Customers a Reason to Stay

  • Offer customers access to a loyalty program with many benefits.
  • Provide a discounted renewal rate for customers close to leaving.
  • Create special promotions or contests to re-engage customers.

Send Customers Renewal and Dunning Emails

  • Voluntary — When a customer asks you to cancel their account
  • Involuntary — When a customers credit card expires and their subscription expires

One More Way to Reduce Churn: Improve the Customer Experience Through Visual Communication

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Dad, Husband, and reformed ski bum. VP of Content and Digital Scorpion, Former CMO of CloudApp and Marketing Lead for Adobe.

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Joe Martin

Joe Martin

Dad, Husband, and reformed ski bum. VP of Content and Digital Scorpion, Former CMO of CloudApp and Marketing Lead for Adobe.

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