There’s an easy way to explain customer churn: it’s when your customers stop buying from you. And, obviously it is not a good thing for your business. Depending on the nature of your business, when a customer stops doing business with you this can mean: cancellation of their account or subscription, non-renewal of a contract, or a decision to shop at another location.

No matter how you look at it, if you want to grow your business, the number of new customers you bring on each month needs to exceed your churn rate.

If you bring on 20 percent new customers every month but your churn rate is higher than 20 percent, then you’re likely burning money on expensive marketing acquisition channels that aren’t growing your business.

How to Calculate Churn Rate

Churn rate is also known as the rate of attrition, if we’re getting official. This rate of attrition is a business term and can be calculated in a few different ways:

  • Total number of customers lost during a specific timeframe
  • Percentage of customers lost during a specific timeframe
  • Recurring business value lost
  • Percentage of recurring value lost

It can be hard to know what a “good” or “bad” rate of attrition is. But WordStream helped out by gathering some online data on churn rate that will help give you a better idea of what you can expect in certain industries:

  • American credit card companies typically have customer churn rates of around 20%
  • European cellular carriers experience churn of between 20-38%
  • Certain American telcos, such as Verizon, have reported very low churn rates – like 0.84% in Q2 2012
  • Software-as-a-Service (SaaS) companies usually report client churn rates of between 5-7%
  • Many retail banks have churn rates of between 20-25%

How to Prevent Customer Churn

Since it’s important to keep your churn rate down, it’s also important to understand how to prevent churn. Thankfully churn can be prevented through some really easy strategies that your business can implement with little to no cost. Here are our favorite four ways to prevent customer churn:

1. Talk to Your Customers About Why They Left

The best way to understand why your customers are churning is to talk to them. You can try sending a survey that might not get opened or responded to, or you can go straight to the source by calling your customers and having an honest, open conversation about why they left. The feedback might be harsh and hard to take, but at least you’ll get to the source of the problem.

2. Make A Great First Impression

Much like meeting someone in person for the first time, first impressions are everything. Follow your customer journey from the moment they find you online until the close of the sale and/or opening of the package to ensure that there is a seamless, awesome experience from zero to 60. If you follow the customer journey yourself and test it all the time, you’ll find the little bumps and iron them out before they affect too many customers.


customer churn

3. Educate Your Customers Through Content

Create a ton of great educational content your customers can easily access that will help them with onboarding, training and troubleshooting. If you ensure your customers are comfortable and informed, they will be less likely to leave when they’re confused or when things go wrong. You can easily offer educational content in the form of free training webinars, product demos, FAQs, screencasts and video tutorials.


customer churn


4. Build an Omnichannel Customer Experience

Omnichannel customer experience is part of an excellent customer service strategy. You need to ensure that your business doesn’t just have a bunch of channels established that don’t have a cohesive brand story, messaging or experience with all of them.

Since mobile phones are at our fingertips, customers regularly pass between using the phone, email, text, video and social media. An omnichannel customer experience makes sure that your customers are having a seamless, consistent experience across all brand channels and that a rep understands every conversation that happened across all channels. Forty-two percent of respondents said repeating their problem to multiple reps was the most frustrating aspect of dealing with customer service departments, so it’s key to ensure all channels are represented with your customer service software and agents.

5. Don’t Stop Nurturing After the Sale

It’s hard work to bring in new leads month after month. So, once those new leads become customers, it can feel like the work is done – but that’s not true.  Staying top-of-mind with customers is just as valuable as staying top-of-mind with prospects. Marketing automation software can help you continue relevant conversations with customers well after their initial purchase. Onboarding campaigns, cross-sell and upsell emails, and monthly check-ins can be easily automated and keep your customers coming back – whether to renew, solve a looming issue, upgrade, or make a new purchase.


customer churn


By understanding your customer churn rate and how to lower it, you’ll be poised for business success. Utilize these tips to keep your customers around and prevent churn, and your customers will be more loyal to your business. You’ll be happy to not be spending unnecessary dollars acquiring customers who leave. This type of approach to business is a win-win situation for both customer and business owner.