Churn rate is the rate that your customers leave your service. One of the things that any internet marketer strives for is reducing the churn rate of their customers. You want to keep as many customers as possible each month. The more customers that leave vs those that stay, the higher your churn rate.
Here is a sobering statistic: 90% of people who install an app will abandon it within a month or the fact that across iOS and Android, worldwide retention after 90 days is just 4%.
What Is Churn?
When customers leave your site, your churn rate has increased. Basically that means the percentage of users who stop using a service are the percentage of customers that churn.
The formula for calculating churn is:
(Users at the beginning of the period – Users at the end of the period) / (Users at the beginning of the period)
Example: At the beginning of the month you had 600 users. At the end of the month you are left with 400 users. Churn rate would be: (600-400)/600 = 33.33% churn rate.
Why People Churn
There are plenty of reasons why people eventually leave. Some of the following are often likely indications of why a customer was lost:
- Price – A lower / more cost effective solution to their problem.
- Fit – Hitting high sales numbers but targeting the wrong people.
- Experience – There are issues with the overall experience.
- Customer Experience – Not feeling positive about the company or not getting the service
Strategies To Reduce The Churn Rate
- Behavioral Surveys – Understanding your customer and why they leave. Gaining insight to improve customer value.
- Reminders – Using push notifications, customized emails, and other.
- Showcasing Value – Making sure your customers are aware of the total value of the service and what it can do for them.