In business there are many terms that can confuse us, but it is extremely important to master them.
We can cite, for example, the "Churn".
But, after all, what is churn?
Churn is the index or the rate of cancellation of subscriptions by customers, that is, reducing the number of churn is essential for the growth and health of any company. Thus, if your company's churn rates are too high it is a sign that something is wrong and thinking about the CAC, lose one lead is to tear money.
There is also revenue churn, which represents how much revenue is lost within the number of customers who have canceled.
How to calculate the churn rate?
To reach the cancellation index, you must divide the number of cancellations at the end of the desired period (weekly, biweekly, monthly) by the number of customers, in the same period, who are still active. The resulting number you multiply by 100.
What is the acceptable number?
The acceptable number depends on the number of customers that your company has, but a common average is between 0,5% and 7%.
Generally, what are the reasons for churn?
- Generate leads or sell to the wrong customer.
- Break the expectation and don't deliver the value you promised.
- Not having or showing a concern and care for the customer.
- Financial issues, it may be that the customer can no longer pay the price charged.
- The customer's needs have changed and he no longer needs your product / service.
How to avoid increasing churn?
- Search, understand why cancellations
- Customers talk to each other, take care to always create good experiences.
- Qualify your leads. Be careful to segment your target audience and persona.
- Sell value, show the customer what you have done for them.
- Align expectations, see if what your customer wants is what you can offer. Be honest about your gaps.
- Identify mistakes and avoid making them again.
However, it is good to think that depending on the reason for the cancellation (if it was not due to dissatisfaction), the client can continue to advocate in your favor, try to maintain a bond and a good relationship.
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