Customer churn rate
Customer churn rate is the percentage rate at which customers are moving away from your business over a period of time. Learning how to tackle churn rates and implementing steps to reduce attrition will strengthen your efforts to retain your customers and keep them satisfied.
One of the metrics that directly affects churn rate is CES (as discussed above), which measures the difficulty or ease with which customers complete part of their shopping journey. The more difficult it is to do business with you, the higher your churn rate will be. However, neither CES nor any other experience metric can be a sure predictor of churn. To understand attrition and the reasons behind it, you need to look at operational insights (such as a decrease in repeat purchases or reduced purchase amounts) across all touchpoints and identify what factors may cause your customer churn.
Use the following formula to arrive at a customer churn rate in your business:
Customer Churn Rate = (Customers at the beginning of the month – Customers at the end of the month) / (Customers at beginning of the month) * 100%
For example, if at the beginning of the month you had 2,500 customers and by the end of the month you had 2,455, then the customer churn rate is 1.8%
Use data analytics tools to help you predict which customer accounts are likely to churn, investigate the reasons behind the data, and, most importantly, implement steps to retain those customers.