Customer churn 101: the basics of churn you need to know

Customer churn 101: an introduction

There are a few numbers that I find extremely important for every CRM strategy to report on. On of them is the customer churn: the number of customers that leave after being a customer for a period of time.

I think customer churn reporting is useful, since you will always be looking for ways to grow your business. Instead of focusing solely on generating new (and often the sexy) business, you should also pay attention to your current customer base. Customer churn gives you an indication of who is leaving the company as a customer (and stops generating revenue), giving valuable feedback to your sales reps and the business as a whole.

What is customer churn?

Customer churn simply put is the number of customers who do not generate revenue in time X, divided by the complete customer base in time X. This period can be put as weeks, months, years of even multiple years. The time is defined by the customer base, your industry and the product(s) you sell.

It makes common sense that a car dealer’s customer churn interval is a lot longer than a restaurant’s. A car dealer will put this time frame at maybe three to five years, where a restaurant should stick to something like one or two weeks. Key is that you can only use customer churn well if your business works with subscriptions or recurring products (like groceries).

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