Customer churn leads to customer loss. A churned customer will no longer buy from you or visit you for services.

Sometimes, just one less-than-excellent experience is enough for a customer to switch providers. Since acquiring a new customer costs much more than retaining an existing one, it's only logical that successful businesses put the customer first and implement customer retention programs.

Think about what acquiring a new customer entails. You have to invest in marketing so the customer learns about your offer. You have to guide them through the entire sales process and strive not to lose them along the way. You have to convince them to make their first purchase before they can trust you based on their positive experiences with your company. To retain an existing customer, you simply need to ensure they remain satisfied, as you've already earned their trust and loyalty.

Customer churn is customer loss. A churned customer will no longer buy from you or visit you for services.

Successful companies have long invested in customer retention activities, those that make it harder for a customer to switch providers. Nevertheless, it happens that a dissatisfied customer "churns" from the company. A churned customer will no longer buy from you or visit you for services. Due to the high costs of acquiring new customers, it's important to monitor your customer churn rate.

Calculate and Track Your Customer Churn Rate

By tracking your customer churn rate, you can assess your effectiveness in customer retention and develop a strategy to improve it. Companies measure churned customers in various ways. You can track just the number of lost customers, or the percentage of lost customers compared to your total customer base. You can also calculate the value of lost purchases, or the percentage of lost purchases against the total value of all purchases. The most commonly used metric is to divide the number of lost customers during a measured period by the total number of customers at the beginning of that period:

For example, if you had 300 customers at the beginning of June and 15 left for the competition during June, your customer churn rate is 5%.

The Main Reason for Customer Churn: Poor Customer Experience

Of course, there are many possible reasons for customers leaving, but based on experience, we can identify the leading one. This is undoubtedly a poor customer experience. As many as 9 out of 10 customers switch providers because they had a bad experience with the first company. Customers demand an excellent experience, and if they don't get it, they switch providers. Even more concerning is that many lost customers share their (bad) experience with friends and acquaintances. The most "critical" customers are in the 25 to 34 age group; as many as 59% of them write about bad experiences on social media. The consequence of this is that even more customers, who didn't even have a bad experience, unknowingly churn from your company.

Dangers and Prevention of High Customer Churn

Customer lifetime value is directly linked to a company's profitability. This means that churned customers (whose lifetime value is, of course, lower than it could be) directly impact a company's profit. To maintain long-term company growth, you must reduce your customer churn rate. The obvious solution is to improve your customers' experience. You can avoid churn if you understand your customers' satisfaction and do everything in your power to improve it. If a customer still leaves, try to understand the reasons for their departure.

The Key to Customer Retention

You need to know your customers and their habits. Monitor their satisfaction, expectations, and needs to be able to satisfy them. How? Gain insight into your customers' experiences. Check their satisfaction at all touchpoints with your company. Analyze the data and identify opportunities for improvement. This will give you a competitive advantage and retain a larger percentage of your customers. You will increase sales and strengthen customer loyalty.