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What is Churn Rate: Definition, Causes and Ways to Overcome It

23 August 2022 - iSystem Asia
what is churn rate

In the world of marketing, the customer churn rate is the percentage of customers who stop using your services or business products. Of course, this will be detrimental to the continuity of your business, and it must be avoided.

How to measure churn rate and why should churn rate be considered? and how to solve it. Here, iSystem Asia will explain how to overcome and reduce it.

What is Churn Rate?

In the article above, you may have started to understand what is meant by churn rate. Here, iSystem Asia will explain in more detail what churn rate is and how to measure and overcome and reduce churn rate.

From Investopedia sources, Churn rate is the percentage or level of customers who decide to stop using business services or products within a certain quarter.

In short, the Churn rate is the percentage of customers who unsubscribe or no longer use your business services.

Paying attention to the churn rate is very important to note because it will measure whether your business can retain your customers well. Especially for businesses that sell products or services that are subscribed to.

A business with this business model can conclude that business revenue is obtained from customers who make repurchases. Where are customers who stop not using your business products again, and if it is referred to as churn that endangers the continuity of your business.

Read Also: What is Marketing CRM? How to Increase Leads

Causes of Churn Rate

Of course, the churn rate does not just happen. Here are some factors that cause the churn rate:

1. Product Prices Do Not Match

The price of a product is one of the determining factors for a customer's decision in making a transaction. If the price offered is not proportional to the benefits obtained from the product, then the customer will be unable to buy the product again or unsubscribe from your product.

2. Product Quality Doesn't Improve

At first, customers will buy your product because it has good quality. However, if this is not maintained, the customer will stop buying the product again.

3. Poor Customer Experience Management

If your business has a high churn rate, you should pay attention to the customer experience in your business. It is possible that your bad customer experience is the cause of the high churn rate.

In short, customer experience is the customer experience when interacting with your business, regardless of the channel used and the interaction that occurs.

Customer experience is an important thing in your business. For example, if your customer wants to ask about your business products or services but doesn't get an answer, of course, this will cause a churn rate.

Read Also: What is CXM (Customer Experience Management)? Definition, Purpose, and Assessment

How to Overcome Churn Rate

Although the churn rate is caused by many things, there are several ways to overcome it in the following ways:

1. Keep Customers Loyal

The first way is to retain customers with several strategies, for example, by creating a customer loyalty program, giving appreciation for purchases, and providing good after-sales services.

2. Sell Products to the Correct Audience

If you sell products on target, it will certainly be able to overcome the churn rate. This is because the customer's needs are right with your product.

This can also increase the efficiency of your marketing activities, and you don't need to spend energy, money, and time on marketing to the wrong people.

3. Personalize Marketing

You can use a strategy to use personalized marketing methods by way of offerings that fit the needs of consumers.

So, when customers buy the products you offer, they will get good value and benefits. For this, you can easily use a CRM marketing system.

Watch Your Business Churn Rate, Don't Lose Customers!

Churn rate is a calculation of the percentage of customers who no longer buy or use your product or service. This percentage is calculated within a certain period, such as monthly, quarterly, and yearly.

The high percentage of churn rate can be an indicator of the failure rate of your business and the continuity of your business. So it is necessary to overcome the percentage churn rate.

One way to overcome the churn rate is to improve the customer experience of your business. By using customer experience management in your business, the churn rate can be overcome. Because the customer's experience will be improved when interacting with your business. The proof is in the fact that 73% of customers will buy a product if they have a good buying experience from a business.

But don't worry, iSystem Asia provides customer experience management (CXM) services that will help your business churn rate be resolved and will earn customer loyalty for your business. iSystem Asia also provides several other services such as CRM and BPM Technology, Consulting and Advisory, Training and Certification. For more information, please contact the person below.

Read Also: Sales CRM Software With Low-code Platform | iSystem Asia

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About Author

iSystem Asia

System Asia is a Management and Technology Consulting Company, focusing on Customer Relationship Management (CRM), Customer Experience Management (CX) and Business Process Management (BPM). Our services range from training, certification, consulting and system implementation.
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