Churn rate refers to the proportion of customers who stopped paying for a product or service, during a given period.
Being the complete opposite of growth rate, churn rate is one of the most important marketing and sales metrics for subscription-based businesses. Churn rate is a decelerator of growth rate and has a direct revenue impact. Calculating churn rate can help brands analyse how satisfied customers are with their product and overall CX. Keeping track of the churn rate can also help brands calculate other metrics such as customer lifetime value.
To decrease churn rate, marketers must ensure they use detailed onboarding emails and product education resources to inform customers how exactly they can benefit from the brand’s products and services. Offering prospects a trial or freemium version of the product or service can also help in the effort to engage qualified audiences.
Marketers need to collect feedback from churned customers to optimise their marketing strategies and retain customers. Brands can even consider repositioning themselves in their market, to avoid overpromising and eventually, under-delivering to their audiences.
[17 minute read]