What the FUCK is churn rate?

What the fuck is churn rate and why is it so important for your company?

Wikipedia tells us:
"Churn rate (sometimes called attrition rate), in its broadest sense, is a measure of the number of individuals or items moving out of a collective group over a specific period. It is one of two primary factors that determine the steady-state level of customers a business will support.

The term is used in many contexts, but is most widely applied in business with respect to a contractual customer base. For instance, it is an important factor for any business with a subscriber-based service model, including mobile telephone networks and pay TV operators. The term is also used to refer to participant turnover in peer-to-peer networks. Churn rate is an important input into customer lifetime value modeling, and can be part of a simulator used to measure ROI using marketing mix modeling."

When you look at your churn rate you know how is your retention performing. How many clients are still purchasing your products after their first purchase. The less drop off the better retention you are doing.

For example lets take a look on clients that deposited for the first month in January 2017.

January: 1000 FTDs (no drop off)

In February only: 500 continue to make purchases (50% drop off)

In March only: 250 continue to make purchases (75% drop off) and so on.

This is one of the most important keys when measuring your retention!

Don't forget retention means to exceed or meet your customers expectation!

Comments

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