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What is Your Churn Rate?

Do you have a churn policy? Is it "Good riddance"? Or as Mr. Wonderful on Shark Tank would say "You are dead to me"?  

It's easy to give up on people who have given up on you. Without an understanding of why they rejected you, it is difficult to improve. "Complaints" are the most valuable type of feedback but when they "walk away" or "unsubscribe", guessing is all you have.

churnrate

WHAT IS CHURN?

The calculation of churn can be straightforward to start off with. Take the number of customers that you lost last quarter and divide that by the number of customers that you started with last quarter.  The resulting percentage is your churn rate.  As an example, a company that started last quarter with 100 customers and lost 3 over the course of the quarter would have a churn rate of 3%. 

You continue to add new contacts and as long as the number of new contacts is growing faster than those who are unfriending, unliking, unsubscribing, walking away or not returning... you can make progress. (This is not true but sounds mathematically accurate.)

Today you sent an email to thousands of people and 30 people clicked "unsubscribe".  There was a specific reason but currently unknown. If I told you that the CEO of a $50 million dollar company just unsubscribed while 50 people on welfare subscribed on the same day... this new information is concerning.

How much concern depends on whether you are selling discounted products such as Pulsetv.com or consulting services such as Resultist.com. A CEO makes an impact and keeping them interested and engaged may or may not be important.

The same is true for a restaurant, dry cleaner, motel, grocery store, consultant, author or contractor.  It appears that growing contacts at a faster rate than the number of people giving up should lead to business growth. (Again, it seems to make sense but this is not a reality in the long term.)

When the reason they are leaving is revealed to be an annoying employee, a specific banner, a complex navigation, a broken link, poor language... it is a good moment to kick yourself for not being aware.

Or...

You care about numbers, things and ratios. People are a pain and who cares what they think? People are inconsistent and selfish. Why go to any trouble for them? Computers, widgets and the age of video games has turned people into inanimate objects to score and control.

If this is true, you can certainly sit in a room with no windows, three computer screens and here is a churn calculator to measure your churn just as if it was a video game:

 churn rate calculator

Not just online...

A brick and mortar business has an advantage since body language and behaviors can be observed and responded to in a flash.  People might smile and say 'everything is fine' but their eyes are angry and their tension apparent.  We learn to read these signs and offer a resolution even though the customer lies and uses words of satisfaction.

Have you ever noticed that social media tools will make a big deal with notifications anytime someone follows, connects or likes you but when they unfriend or disconnect... the person silently slips away.  

I canceled you...

I unfriended 10 people and unsubscribed from 10 email updates today. They will never know I did, nor the reason why. What is perceived as powerful social tools are not helpful enough to keep a user informed about reality.

You were canceled...

Today 30 important people decided you were not worth their time. They will not read, share your business or buy from you. You have been deleted from their mind and email.

This should inspire you to have a policy for churn.

i.e. Call 10 people each month (or 20) from the churn list to ask: "Could you share your advice? Is there something better we can do to be relevant and valuable?" 

If you believe it is important to have excellent connections exceptional service, it should be easy to make the next decision. Those contacted will amaze you with their insights and feedback. (Guaranteed)

You are the boss...

Software engineers and data hoarders will tell you acceptable churn rates but numbers are only a small piece of the real story. While imperfect, feedback from real people is priceless.  People might give up on you but I have found that reaching out to them personally has consistently offered new opportunities.

Doubling revenue occurred because of the generousity of advocates, ambassadors, believers, fans and many people who at one time said "I reject you". Treat them as a friend, family or royalty. (Not a number) 

Topics: Marketing Statistics Customer Service Analytics Conversion Ecommerce