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Customer Churn

1. What Is Customer Churn?

Customer churn in simple words is the number of customers who were lost in a stipulated period of time. It is the number of customers that stopped using your company's product or service i.e switched to some other brand or an alternative.

Every company must aim for a churn rate of close to zero percent. To achieve this, your company needs to maintain exceptional customer service and ensure that the customer is given top priority at all times. 

Some examples of customer churn are:

  • Cancellation of a subscription.
  • Non-renewal of a contract.
  • Deactivation or closure of an account.
  • Switching to some other company/service provider.

2. Why Is Customer Churn Rate Important?

Calculating customer churn rate is very important because it's easier to retain the existing customers over acquiring new customers. Acquiring new customers can be very costly. As per research, an increase in customer retention by just 5% can bring about 25-30% increase in the overall profits. A returning customer is more likely to spend more on your product or services making them more profitable for the company in the long run. 

Acquiring new customers can be time-consuming as you don’t need to convince your existing customers to select your brand over others.Calculating customer churn rate is very important to save time and money spent on acquiring new customers. 

3. How To Calculate Customer Churn Rate?

To measure your churn rate, you can either calculate the:

  • Total number of customers lost at a given point in time.
  • Percentage of customers lost at a given point in time.
  • Recurring business value lost.
  • Percentage of recurring value lost, etc.

A simple technique to measure your churn rate would be checking the number of subscribers you have at the end of the month, rather than focusing on the beginning.


The formula used to calculate the customer churn rate is: 

Customer churn rate (%) during (x) period= Customers lost during (x) period ÷  Customers at the start of the same period* 100


4. What Is A Good Customer Churn Rate?

Well in a perfectly balanced world where no customer ever complained and everyone lived together in peace and harmony, the good customer churn rate would be zero.

But this isn't possible in the real world. No matter how good the company is in terms of its customer service, they will lose customers. There isn’t any single churn rate as such, as it depends on the industry the company is operating in.

Some industries have higher rates of customer churn when compared to others.

Here are some average customer churn rates in some common industries:

  • The churn rate for an American credit card company is typically around 20%.
  • The churn rate for European cellular carriers is anywhere around 20-40%.
  • The churn rate for Software-as-a-Service (SaaS) companies is around 5-10%.
  • The churn rate for a lot of retail banks is anywhere around 20-25%.

The average customer churn rate which could be considered good by companies can be atrocious to others. Every business is different and so is their operating model. Therefore no business has a single churn rate that’s considered good.

5. How To Reduce Customer Churn Rate?

Here are 15 simple ways/techniques you should adopt to reduce the customer churn rate:

  1. Make a good first impression.
  2. Keep a close eye and analyze why churn occurs.
  3. Listen & engage with your customers.
  4. Educate your customers.
  5. Work on annual subscriptions.
  6. Offer incentives.
  7. Constantly keep on improving on your product/service.
  8. Identify & target the right audience.
  9. Generate loyal customers.
  10. Try to win back on the customers you lost.
  11. Pay close attention to your customer complaints.
  12. Identify the reasons for cancellations, then fix it as soon as possible.
  13. Show your customers what makes you different and better from your competition.
  14. Anticipate some amount of customer losses in advance and create a model around it.
  15. Provide a customer service that's worth remembering for good reasons.

6. Can Chatbots Help Companies in Reducing Customer Churn Rate?

Yes! Here are the 5 reasons why you need chatbots over mail or telesales to improve your customer churn rate:

1. Chatbots can enhance your customer reach.

2. Improve customer engagement.

3. Improve customer convenience.

4. Lower the service delivery costs.

5. Provide a differentiated customer experience.

7. How can a WhatsApp Chatbot Strategy improve Customer Churn Rate?

WhatsApp chatbot is a growth hacking tool when it comes to business. By using the power of AI and chatbots, companies can reduce the customer churn rate by a significant amount. A lot of businesses have started using WhatsApp automation tools to grow their business. Here's how it can improve your customer churn rate:

1. Provides your customers with an impressive first impression.

With the amount of competition around your business you only get one chance to create a good impression. Even after signing up for your campaign (email, SMS), there are a lot of things that they don't know about your brand or product. 

WhatsApp chatbots are a great way to continuously engage with your customers. This not only creates a good first impression but maintains it over the long run. To effectively run your business, you need to provide an engaging and personalized environment for your customers, and that's where WhatsApp chatbots play a crucial role.

2. Satisfies your customer:

A satisfied customer = loyal customer of your business. Customer satisfaction leads to customer retention, which is very important for your business.

A WhatsApp chatbot can quickly respond and resolve your customer’s queries and problems giving them a satisfactory experience, this helps in reducing the customer churn rate.

3. Helps in converting existing customers into loyal customers:

Making your existing customer base loyal to your brand helps your business to reduce the churn. Having a loyalty program will encourage the customers to get more money into your business in exchange for discounts, special offers, cashbacks, etc.

Chatbots can also help in sending out loyalty cards, birthday wishes/cards, anniversary cards, etc.


4. Generates more revenue into the business: 

Chatbots are conversational computer programs that engage with your customers through automated messages. They are very engaging, responsive, and provide a 24/7 availability making it a preferred option by your customers. Due to such incredible potential, the demand for them is skyrocketing and is no more a privilege but a must-have for every business.

It's affordable as well, which helps in generating more revenue for the business. The returns from a chatbot are way higher than its initial investment, making it a perfect choice for all the businesses out there.

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