Customer Churn Rate

Customer Churn Rate refers to the percentage of customers you lose during a given period. For local service businesses, this usually means customers who cancel their recurring service(s) OR customers who fail to make a repeat purchase within a specified window. This could be 30 days, 90 days, or some other length of time. Of course, the opposite of this metric is Customer Retention Rate, which refers to the percentage of customers you keep during a given period.

How to calculate your Customer Churn Rate:

[ (#) Total customers churned this period / (#) Total customers at the start of this period ] X 100 = (%) Customer Churn Rate

What we like about Customer Churn Rate:

Measuring Customer Churn helps you gauge customer satisfaction and determine whether or not customers see value in continuing to do business with you. This is important for local service businesses that solve an ongoing problem (lawn care, pool service, etc.). If your churn rate is high, you need to work on your Customer Fulfillment system, which simply means you need to exceed expectations when you provide your customers with a service.

What we don’t like about Customer Churn Rate:

Customer Churn Rate helps you understand how well you’re retaining your customers, but doesn’t always tell you how to fix the problem. What’s causing them to churn? Are they high-value or low-value customers? Would they be better served by another service? All these questions (and more) can be answered by sending a Net Promoter Score survey every so often. So, in addition to tracking your Customer Churn Rate, keep an eye on your NPS too. This will give you the qualitative feedback you need to make an informed decision.

Marketing metrics similar to Customer Churn Rate:

Before you select Customer Churn Rate as your One Metric That Matters (OMTM), be sure to check out these related marketing metrics and KPIs for context.

Customer Lifetime Value
Net Promoter Score

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