What is churn?

In business and marketing, churn (sometimes referred to as attrition) is the rate at which customers stop doing business with a company.

It is often expressed as a percentage of total customers or revenue. Churn can have a significant impact on the profitability of a company because it can affect customer retention and customer acquisition costs.

How is churn calculated?

Churn is calculated by taking the number of customers that have cancelled their subscription or stopped doing business with a company in a given period and dividing it by the total number of customers during that same period.

This percentage can then be used to measure customer attrition over time, allowing businesses to identify trends and take action to address any problems.

For example, if you acquire 100 new subscribers in a quarter, but you lost 19, your churn rate would be (19 / 100) x 100 = 19%.

What are the top five causes of churn?

The top five causes of churn are:

  1. Bad customer service
  2. Inadequate strategy for increasing customer loyalty
  3. Lack of competitive advantages
  4. Poor product or service quality
  5. A mismatch between customer expectations and the company’s offering.

These are all factors that can lead to customers no longer being interested in engaging with a company.

How can marketers reduce churn?

Marketers can reduce churn by putting strategies in place to improve both customer experience and customer service.

This includes:

  • Building automated workflows to respond quickly to customer inquiries and complaints
  • Maximizing customer loyalty through incentives and rewards
  • Building competitive advantages into the product or service offering
  • Ensuring product or service quality is up to standard
  • Making sure the company’s offering meets the customers’ expectations

Taking the time to address these issues can help marketers increase customer retention rates and reduce churn.

Reducing customer churn with Emarsys

Emarsys works with leading brands like PUMA, Pizza Hut, and Nike to help them acquire more customers, drive average order value, and increase retention by unifying their customer, sales, and product data and enabling personalized omnichannel customer engagement.