Introduction
Customer churn refers to the loss of clients or customers from a company's customer base. It is typically measured as the rate at which customers stop doing business with a company over a year. High customer churn rates can be an indicator of a variety of possible issues. Businesses wanting to make the most of the possibilities that each customer brings, need to implement a plan to reduce customer turnover as much as possible. Retaining existing customers is far more cost-effective than acquiring new ones.
On average:
a B2B business will lose 5% of customers each year;
worse still, a B2C business will lose 7% of customers.
(source: Recurly Research).
The strategies that are employed to lower the rate of customer churn may also be utilised to raise the customer's lifetime value (CLV) and encourage advocacy. Therefore, as you are raising the proportion of customers that you keep, you will also boost revenue and the number of new customers that you acquire, while simultaneously reducing the number of complaints and service issues that you receive.
