Customer Churn: What Is It, and How Do You Reduce It?

As you grow your business, you become well acquainted with metrics. Most of these metrics – like your compounded monthly growth rate and retention rate – are fun to evaluate, giving you a much-needed boost of confidence and satisfaction. They frame things positively, indicating where your business is headed in a “glass half full” kind of way. 

Then there’s customer churn. It isn’t the prettiest metric to consider, but it’s just as important as any other. Further, it can help snap you back to reality, forcing you to reckon with central issues keeping your business back from full-on success. 

What is customer churn? How is it calculated? And how can you reduce it by leveraging a powerful mobile app? 

What Is Customer Churn?

Simply put, customer churn is the rate at which customers stop using your service or buying your product. Also known as “customer attrition,” it represents the other side of the coin from customer retention. Whereas retention deals with the percentage of customers who stay, churn is concerned with the ones who leave. It spurs an all-important question: Why did they leave? 

How About the Churn Rate?

Businesses express customer churn with a “churn rate,” a percentage of buyers or service subscribers who leave in a given timeframe, compared with the total starting number. 

It’s relatively straightforward to calculate: divide the number of lost users by the number of overall users at the start of a specified timeframe – then multiply by 100 for a percentage. Let’s say, in this past month, you started with 1000 users but lost 180; your churn rate would be 18%. 

How to Reduce Customer Churn

In a perfect world, your churn rate would be nil. You would never lose a user. But that’s never the way things happen. Rather, you can consider churn rate an opportunity to review your business with fresh eyes – elevating your customer service, user experience, hurdles and engagement tactics. To reduce churn rate, hire an app development company to build you a custom mobile app with the following in mind: 

• Cutting Edge Customer Service – All Day, Every Day: If a lack of support is causing churn, talk to an app developer about implementing AI-powered chatbots to guide your users through the buyer’s journey. Chatbots can manage frustrations, make recommendations and answer customer questions, so users never feel abandoned.
• “Stickiness” and Intuitive Design: Is your messy UX to blame for a high churn rate? Do your users feel lost on their way toward using your service or buying your product? Consult with app developers who know their way around human-centric, sticky and intuitive design.
• Dismantling Hurdles in the Buyer’s Journey: If your subscribership process is onerous, or your buying process is rife with user obstacles, collaborate with app developers to streamline those actions.
• Foiling Competitor Intervention with Engaging Features: Competitor intervention is a common source of customer churn – and a hard one to solve for. Try leveraging engaging technologies like AR, VR, and machine learning to provide a more captivating user experience. Immersive technologies, in particular, are effective at pulling in (and keeping) on-the-fence users.

No one wants to dwell on the negatives, especially when you have a business to run. But gloomy metrics like customer churn do more than paint a sobering picture of your business; they encourage you to solve problems creatively. Partner with an app development company to tackle rising churn rates with engaging features and user-focused design.