Customer Churn Definition
Customer churn occurs when a customer, or group of customers, stops doing business with a company. Churn can happen for many reasons, such as poor customer service, a competitor’s superior offerings, or simply because a customer no longer needs the product.
When a company experiences customer churn, it can have a significant impact on its bottom line. Not only does the company lose revenue from the customers who are no longer doing business with it, but it also incurs additional costs in acquiring new customers to replace the ones it has lost.
There are two main types of customer churn: voluntary and involuntary. Voluntary churn occurs when a customer cancels their subscription or otherwise decides to stop doing business with a company. Involuntary churn happens when a company cancels a customer’s subscription or account due to non-payment or some other reason.
Companies often use various techniques to try to reduce customer churn, such as offering discounts or loyalty programs. However, sometimes the best way to reduce churn is simply to provide excellent customer service and make sure that your product is meeting your customers’ needs.
