Churn Rate: What It Is and How to Reduce Customer Churn
Churn Rate is a metric that measures customer churn: the share of users who stopped using a product over a certain period.
Formula (quarterly):
CR = (Customers who stopped using the company’s products during the previous quarter / Total customers during the quarter) × 100%
The average Churn Rate is around 8%.
For IT and digital sectors, a typical range is 5–7%.
Why Churn Rate increases:
- natural changes in a customer’s life (relocation, changing needs);
- the emergence of a competitor with a more convenient or versatile product;
- decreased need for the product (for example, quitting caffeine → buying less coffee);
- issues with the service, application, interface, or product quality.
How to identify churn causes:
- collect user feedback;
- test hypotheses using statistical testing;
- gather reviews and mentions on social media;
- conduct cohort analysis to compare churn dynamics across periods and identify correlations with external factors.
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