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what is the churn rate?

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The churn rate is one of the essential metrics that you must apply in your company if you want to know the churn rate of your customers. Now we will tell you more.

what is the churn rate?

The churn rate indicates the percentage of customers or subscribers who stop using the services or unsubscribe from a subscription list or database. This rate not only measures the rate of customer churn, but also your company's ability to retain them.

It is a basic metric to understand customer satisfaction and thus evaluate the success of your brand, as the result of calculating this rate tells you all the customers that have been lost, and therefore are no longer in the conversion funnel.

In other words, the churn rate refers to the total percentage of customers who unsubscribed from a service in your company during a given period. This rate can be calculated on a monthly, quarterly or even yearly basis, depending on your needs.

how is the churn rate measured?

The churn rate formula is the number of lost customers or subscribers divided by the total number of customers or subscribers multiplied by 100.

As you can see the formula is not complicated, but remember that it is calculated over a period of time, i.e. customers lost during the last quarter, for example.

It is difficult to determine between which percentages it is ideal to maintain the churn rate, as it depends very much on the sector, the company and the circumstances in general, but it is generally considered that more than 15% churn rate is an alarming indicator.

¿Qué es el churn rate?

how can you reduce the churn rate?

Ideally we would like to have a churn rate of 0, but this is almost impossible, so the ideal is to get it as low as possible. Here are some practices you can do to get your churn rate as low as possible:

  1. Identify your weaknesses. It is clear that when a user subscribes to your newsletter, your database, or wherever, it is because they are interested in what you offer. But when they unsubscribe it is because they are no longer interested, that is, because your product, your service, your offers, your content, or whatever it is no longer has the same quality or is no longer as interesting. Analyse what is going wrong and compare and investigate the competition.
  2. Find out the reason for cancellations. In order to succeed with your business you have to identify the problem so that you can improve it. You can ask your customers directly through surveys to find out their opinion. This way they will be the ones who will give you the keys to why you are failing.
  3. Make a good segmentation: it is an essential step to know the needs, tastes and doubts of your customers. You cannot make campaigns for everyone, you have to address your ideal customer, that is why it is important that you create the profile of your buyer persona, because it is to him that you address your products and services.
  4. Keep up to date: what you offer today may work today, but in a few months' time it will not. It is important that you keep up to date with new trends and offer value: change the design, add new content, look for new ways of communicating, etc. Improve what you offer.
  5. Improve what you offer. A customer subscribes to a list of a company, brand or business because they are interested in what it offers, but if it is always the same, or your campaigns and actions are no longer up to par with your products, the customer will get tired and will unsubscribe if they don't get anything new and interesting.
  6. Find the ideal frequency. One of the main causes for unsubscribing from a brand's contact list is receiving too many emails or notifications from them. At this point, many companies send so many emails that they are considered spam, and others, to avoid it, fall very short. You have to find the right time, the right amount and the right design.

¿Qué es el churn rate?

To conclude, we recommend that you do not get overwhelmed with the result of the churn rate. Sometimes it is not so bad to lose customers, because if they do not adapt to your business and are not going to move from phase to phase in the conversion funnel, it is better that they no longer belong to your database. Remember that the churn rate is an important indicator so you should not leave it aside, but not get frustrated by the result. You have to find ways to attract new subscribers but never leave aside the ones you already have. In addition, keeping a customer is much more profitable than making a new one. Thanks for reading us!

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