Terms

Churn

Churn, also known as the rate of attrition, is the percentage of customers who stop doing business with a company over a specific period. It is a critical metric for evaluating a company's health, reflecting its ability to retain clients and the perceived value of its offerings. While most often associated with subscribers, the term can also apply to the rate at which employees leave an organization.

Causes of Churn

Customers often leave due to core product issues, like poor quality, bugs, or a frustrating user experience. A mismatch between features and customer needs is another major factor. If the price is perceived as too high for the value delivered, customers will seek alternatives.

Poor customer service is also a significant driver of churn. In competitive markets, the availability of alternatives makes it easy for clients to switch. A lack of engagement or a damaged company reputation can also push customers away.

Impact of Churn on Business

High customer churn can have devastating effects that ripple throughout a business, impacting more than just the bottom line. It serves as a critical indicator of a company's financial health and long-term viability. The consequences of a high churn rate are multifaceted and severe.

  • Revenue: Directly reduces recurring income and overall profitability.
  • Growth: Stalls or reverses expansion by offsetting new customer acquisition.
  • Costs: Increases spending on marketing and sales to replace lost customers.
  • Profitability: Shrinks margins since retaining customers is far cheaper than acquiring new ones.
  • Reputation: Damages brand image and reduces valuable word-of-mouth referrals.

Churn vs. Attrition

While often used interchangeably, the terms 'churn' and 'attrition' carry different connotations depending on the business context.

  • Churn is primarily used for the rate at which customers cancel subscriptions, especially in SaaS and telecommunications. It's a key metric for gauging product satisfaction and financial health. For both enterprises and mid-market companies, a high churn rate signals issues with product-market fit or customer service, directly impacting revenue and growth forecasts.
  • Attrition is more commonly applied to employee turnover, helping HR departments analyze retention patterns and organizational health. While it can describe customer loss, its main advantage is in highlighting internal issues like management quality or compensation, a crucial consideration for companies of all sizes looking to maintain a stable workforce.

Strategies to Reduce Churn

Reducing churn requires a proactive approach focused on enhancing customer value and experience. By understanding why customers leave, businesses can implement targeted strategies to improve retention. These efforts not only secure revenue but also build long-term loyalty.

  • Onboarding: Ensure customers quickly understand and derive value from your product through effective training and support.
  • Service: Provide exceptional, multi-channel customer support to resolve issues promptly and build trust.
  • Feedback: Actively solicit customer input through surveys and interviews to identify and address pain points.
  • Engagement: Keep customers invested with valuable content, product updates, and proactive communication.

Measuring Churn Rates

Measuring churn rate involves calculating the percentage of customers lost over a specific timeframe. While the basic formula is simple, consistency in measurement is key to tracking performance accurately over time. This metric provides a clear snapshot of customer retention and business health.

  • Formula: Divide the number of customers lost during a period by the total number of customers at the start of that period.
  • Timeframe: Define a consistent period for measurement, such as monthly, quarterly, or annually, for accurate comparisons.
  • Consistency: Using the same calculation method every time is crucial for reliable tracking and identifying trends.

Frequently Asked Questions about Churn

What is considered a good churn rate?

A "good" churn rate varies by industry and customer segment. For SaaS companies targeting small businesses, 5-7% annually is often seen as acceptable. For enterprise clients, however, the target should be much lower, ideally under 1% annually, reflecting higher contract values.

How is customer churn different from revenue churn?

Customer churn measures the percentage of customers lost. Revenue churn, or MRR churn, measures the percentage of monthly recurring revenue lost. The latter provides a more accurate financial picture, as it accounts for the varying contract values of lost customers.

Is it possible to have zero churn?

Achieving zero churn is highly unlikely and often unrealistic. Some customer loss is inevitable due to factors outside your control, like business closures or strategy shifts. The goal is to minimize preventable churn through excellent service and product value, not eliminate it entirely.

Other terms

Oops! Something went wrong while submitting the form.
00 items

Retargeting Marketing

Retargeting marketing is a digital advertising strategy that targets users who have previously interacted with your website or brand online.

Retargeting Marketing

Performance Plan

A performance plan is a formal document outlining an employee's goals, expectations, and metrics for success over a specific period.

Performance Plan

Quarterly Business Review

A Quarterly Business Review (QBR) is a recurring meeting to assess performance against goals and align on strategy for the next quarter.

Quarterly Business Review

Sales Forecast

A sales forecast is a projection of future sales revenue. It's a crucial tool for businesses to make informed decisions and allocate resources.

Sales Forecast

Brand Loyalty

Learn about brand loyalty, including how to build brand loyalty, benefits of brand loyalty, measuring brand loyalty, & strategies for increasing loyalty.

Brand Loyalty

No Cold Calls

No Cold Calls is a sales strategy that replaces unsolicited calls with warm outreach to prospects who have already demonstrated interest.

No Cold Calls

FAB Technique

The FAB technique is a sales framework connecting product features to advantages and then to the specific benefits for the customer.

FAB Technique

Quality Assurance

Quality Assurance (QA) is the systematic process of ensuring a product or service meets specified quality standards from development to delivery.

Quality Assurance

Lead Qualification

Lead qualification is the process of determining which prospects are most likely to become paying customers based on predefined criteria.

Lead Qualification

Sales Enablement

Sales enablement provides sales teams with the necessary tools, content, and information to help them sell more effectively and efficiently.

Sales Enablement

Email Verification

Email verification is the process of confirming that an email address is valid and deliverable, which helps improve campaign performance.

Email Verification

Marketing Attribution

Marketing attribution is the process of identifying which touchpoints contribute to a conversion and assigning value to each of them.

Marketing Attribution

Tokenization

Tokenization is the process of breaking down text into smaller units called tokens, such as words or characters, for AI to process.

Tokenization

Low-Hanging Fruit

Low-hanging fruit are the most obvious and easy-to-tackle tasks or goals that provide a quick, valuable return for minimal effort.

Low-Hanging Fruit

SEM

Search Engine Marketing (SEM) is a digital marketing strategy that uses paid tactics to increase a website's visibility in search engine results.

SEM

Bounce Rate

Learn about bounce rate, including understanding bounce rate implications, key factors affecting bounce rate, & reducing your bounce rate effectively.

Bounce Rate

Trademarks

Think of a trademark as a brand's unique signature—a word, symbol, or phrase that legally protects its identity and sets it apart from the rest.

Trademarks

Enrichment

Enrichment is the process of adding third-party data to your existing customer profiles to get a more complete picture of your leads.

Enrichment

Sales Prospecting Software

Sales prospecting software automates the process of finding, contacting, and tracking potential customers to help sales teams build their pipeline.

Sales Prospecting Software

CRM Enrichment

CRM enrichment is the process of adding third-party data to your existing customer profiles to make them more complete and accurate.

CRM Enrichment

Data Management Platform

A Data Management Platform (DMP) is a software that collects and organizes audience data from various sources for targeted marketing efforts.

Data Management Platform

Sales Engagement

Sales engagement is the sum of all interactions between a seller and a prospect, aimed at building a relationship and moving a deal forward.

Sales Engagement

Website Visitor Tracking

Website visitor tracking collects and analyzes data on user behavior to understand their journey and improve the overall user experience.

Website Visitor Tracking

Site Retargeting

Site retargeting is a marketing strategy that shows ads to people who have previously visited your website but left without converting.

Site Retargeting

Target Account Selling

Target Account Selling is a focused sales strategy where teams identify and pursue a specific list of high-value accounts.

Target Account Selling

Event Marketing

Event marketing is a strategy where brands engage directly with target audiences through live events like trade shows, conferences, or webinars.

Event Marketing

Mid-Market

Mid-market companies are businesses larger than small businesses but smaller than large enterprises, often defined by revenue or employee size.

Mid-Market

Cross-Site Scripting

Cross-Site Scripting (XSS) is a web security vulnerability that allows attackers to inject malicious scripts into trusted websites.

Cross-Site Scripting

B2B Leads

Learn about B2B leads, including identifying quality B2B leads, generating B2B leads effectively, & B2B leads vs. B2C leads: understanding the differences.

B2B Leads

Siloed

Siloed describes the isolation of data, teams, or systems within a company, which blocks collaboration and creates operational bottlenecks.

Siloed

Content Syndication

Content syndication is the process of republishing your web content on third-party sites to reach a much wider audience.

Content Syndication

Inbound Sales

Inbound sales attracts interested prospects who've engaged with your brand, letting sales reps connect with warm leads instead of cold outreach.

Inbound Sales

Decision Maker

A decision-maker is an individual with the authority to make significant choices for a company, especially regarding purchases or strategy.

Decision Maker

Video Email

Video email involves embedding a short video directly into an email. This lets recipients watch your message without leaving their inbox.

Video Email

Data Pipelines

A data pipeline is a set of automated processes that move raw data from various sources to a destination for storage and analysis.

Data Pipelines

Complex Sale

A complex sale features a long sales cycle, multiple stakeholders, and a high-value transaction, demanding a strategic, consultative approach.

Complex Sale

B2B Demand Generation

Learn about B2B demand generation, including strategies for effective B2B demand generation, & key components of a demand generation program.

B2B Demand Generation

Conversion Rate

Conversion rate is the percentage of visitors who complete a desired goal, like a purchase or sign-up, out of the total number of visitors.

Conversion Rate

Account View Through Rate

Account View-Through Rate (AVTR) is the percentage of target accounts that see an ad and later visit your website without clicking on it.

Account View Through Rate

Zero-Based Budgeting (ZBB)

Zero-based budgeting (ZBB) is a method where all expenses are re-evaluated and must be justified from scratch for each new budget period.

Zero-Based Budgeting (ZBB)

B2B Marketing Analytics

Learn about B2B marketing analytics, including key components of B2B marketing analytics, & getting started with B2B marketing analytics.

B2B Marketing Analytics

Freemium Models

A freemium model offers a product's basic features for free, enticing users to upgrade to a paid version for more advanced capabilities.

Freemium Models

Horizontal Market

A horizontal market is one where a product or service is designed to meet a common need for a wide array of customers, regardless of their industry.

Horizontal Market

Product Recommendations

Product recommendations are a marketing strategy that uses customer data to suggest relevant products, boosting sales and customer engagement.

Product Recommendations

Dynamic Data

Dynamic data is information that updates in real-time. Unlike static data, it reflects the most current state of information automatically.

Dynamic Data

Consumer

A consumer is an individual or entity that buys products or services for personal use, not for resale. They are the final user in a supply chain.

Consumer

Buyer Behavior

Learn about buyer behavior, including understanding the buyer's journey, influencing factors in buyer behavior, & buyer behavior and marketing strategy.

Buyer Behavior

Unique Selling Point

A Unique Selling Point (USP) is the distinct feature or benefit that sets your product, service, or brand apart from the competition.

Unique Selling Point

Sales Kickoff

A sales kickoff (SKO) is an annual event for a sales team to celebrate wins, align on goals, and get motivated for the upcoming year.

Sales Kickoff

Lead Generation

Lead generation is the process of identifying and cultivating potential customers for a business's products or services.

Lead Generation

Business Intelligence

Learn about business intelligence, including key components of business intelligence, the role of BI in decision making, business intelligence tools and techniques.

Business Intelligence

Artificial Intelligence in Sales

AI in sales uses smart technology to automate repetitive tasks, analyze customer data, and help sales reps close deals more efficiently.

Artificial Intelligence in Sales

Buying Committee

A buying committee is a group of stakeholders within an organization who are jointly responsible for making major purchasing decisions.

Buying Committee

User Interface

A User Interface (UI) is the point where humans and computers interact. It encompasses all visual elements like screens, icons, and buttons.

User Interface

Weighted Sales Pipeline

A weighted sales pipeline forecasts revenue by assigning a closing probability to each deal, giving a more accurate picture of potential income.

Weighted Sales Pipeline

Process Builder

Process Builder is a Salesforce automation tool that lets you create 'if/then' business processes with a user-friendly visual interface.

Process Builder

Letter of Intent

A Letter of Intent (LOI) is a document declaring the preliminary commitment of one party to do business with another, outlining the chief terms.

Letter of Intent

X-Sell

X-Sell, or cross-selling, is a sales strategy of selling additional, related products or services to an existing customer base.

X-Sell

CCPA Compliance

CCPA compliance is adhering to the California Consumer Privacy Act, a law that grants consumers more control over their personal data.

CCPA Compliance

Business-to-Business (B2B)

Learn about B2B, including what is it, its key elements, the benefits of B2B partnerships, the differences between B2B and B2C, and strategies for effective marketing.

Business-to-Business (B2B)

Customer Relationship Management Hygiene

CRM hygiene involves regularly cleaning and updating your customer data to ensure your CRM system remains a powerful and reliable tool.

Customer Relationship Management Hygiene

Loss Aversion

Loss aversion is our tendency to feel the sting of a loss more acutely than the pleasure of an equivalent gain.

Loss Aversion

SQL

SQL (Structured Query Language) is the standard language for managing and querying data within relational databases.

SQL

Marketing Attribution Model

A marketing attribution model is a framework for assigning credit to the marketing touchpoints that lead a customer to convert.

Marketing Attribution Model

Sales Stack

A sales stack is the suite of tech tools—from CRMs to prospecting software—that sales reps use to close deals faster and more efficiently.

Sales Stack

Workflow Automation

Workflow automation uses rule-based logic to run a sequence of tasks that would otherwise require manual human effort to complete.

Workflow Automation

Brand Equity

Learn about brand equity, including understanding its importance, building strong brand equity, measuring brand equity, & real-world applications.

Brand Equity

Data Visualization

Data visualization is the practice of translating information into a visual context, like a map or graph, to make data easier to understand.

Data Visualization

Buyer’s Remorse

Buyer’s remorse is the sense of regret or anxiety that can arise after making a purchase, often questioning if it was the right decision.

Buyer’s Remorse

Direct Sales

Direct sales involves selling products directly to consumers in a non-retail setting, such as at home, online, or person-to-person.

Direct Sales

Account-Based Everything

Account-Based Everything (ABE) is a strategy aligning sales, marketing, and success teams to focus on a specific set of high-value accounts.

Account-Based Everything

Data Encryption

Data encryption translates data into another form, or code, so that only people with access to a secret key or password can read it.

Data Encryption

Scrum

Scrum is an agile framework that helps teams structure and manage their work through a set of values, principles, and practices.

Scrum

Targeted Marketing

Targeted marketing focuses on specific consumer groups whose needs align with your product, allowing for more personalized and effective messaging.

Targeted Marketing

Multi-Channel Marketing

Multi-channel marketing uses various platforms—like email, social media, and direct mail—to engage with customers wherever they are.

Multi-Channel Marketing

B2B Contact Base

Learn about B2B contact base, including building an effective B2B contact base, & strategies for expanding your contact base.

B2B Contact Base

CSS

CSS, or Cascading Style Sheets, is the code that styles a website. It controls the colors, fonts, layout, and overall look of a web page.

CSS

Infrastructure as a Service

Infrastructure as a Service (IaaS) is a cloud computing service that offers essential compute, storage, and networking resources on-demand.

Infrastructure as a Service

Data Privacy

Data privacy is an individual's right to control their personal information, including how it's collected, processed, stored, and shared.

Data Privacy

Subscription Models

Subscription models are a business strategy where customers pay a recurring fee at regular intervals for access to a product or service.

Subscription Models

Total Addressable Market (TAM)

Total Addressable Market (TAM) represents the maximum revenue a company can earn by selling its product or service in a specific market.

Total Addressable Market (TAM)

Persona-Based Marketing

Persona-based marketing uses fictional customer profiles, or personas, to create targeted messaging for specific audience segments.

Persona-Based Marketing

Sales Prospecting Techniques

Sales prospecting techniques are methods used by sales teams to identify, contact, and qualify potential customers, also known as prospects.

Sales Prospecting Techniques

Serviceable Obtainable Market

Serviceable Obtainable Market (SOM) is the portion of the market you can realistically capture with your current resources, sales, and marketing.

Serviceable Obtainable Market

Price Optimization

Price optimization is the process of finding the ideal price for a product or service to maximize profitability or other business objectives.

Price Optimization

Mobile Optimization

Mobile optimization adapts your website to ensure visitors on smartphones and tablets have a seamless, user-friendly experience.

Mobile Optimization

Account-Based Sales

Account-Based Sales (ABS) is a focused B2B strategy where sales and marketing teams treat high-value accounts as individual markets of one.

Account-Based Sales

Rapport Building

Rapport building is the process of establishing a connection and mutual understanding with someone, creating a foundation of trust and affinity.

Rapport Building

B2B Data Erosion

Learn about B2B data erosion, including causes of B2B data decay, strategies to combat data erosion, & measuring the impact of data erosion.

B2B Data Erosion

B2B Sales

Learn about B2B sales, including key strategies for B2B success, types of B2B sales models, & B2B vs. B2C sales: understanding the differences.

B2B Sales

Click-Through Rate

Click-through rate (CTR) is a metric that measures the percentage of people who click on a specific link, ad, or call-to-action.

Click-Through Rate

Follow-up

A follow-up is a communication sent after an initial interaction to continue the conversation, provide more value, or prompt a response.

Follow-up

Segmentation Analysis

Segmentation analysis is the process of dividing a broad market into smaller, distinct groups of consumers with similar needs or characteristics.

Segmentation Analysis

B2B Data Enrichment

Learn about B2B data enrichment, including benefits of B2B data enrichment, implementing B2B data enrichment strategies, B2B data enrichment vs. data cleaning.

B2B Data Enrichment

CRM Data

CRM data is the information businesses use to manage customer relationships. It covers contact details, purchase history, and communication logs.

CRM Data

Average Selling Price

Average Selling Price (ASP) is the average price at which a particular product or service is sold across different markets and channels.

Average Selling Price

Account-Based Marketing

Account-Based Marketing (ABM) is a focused B2B strategy where marketing and sales collaborate to target and convert high-value accounts.

Account-Based Marketing

Scalability

Scalability is a company's ability to handle increased workloads or market demands without a drop in performance or a spike in costs.

Scalability

Sales Manager

A Sales Manager leads a sales team, setting goals, analyzing performance, and developing strategies to drive revenue and meet targets.

Sales Manager

DMP

A Data Management Platform (DMP) is a tech platform used to collect and manage data, mainly for digital marketing and advertising campaigns.

DMP