Customer churn
What is Customer Churn Rate?
Customer churn rate refers to the percentage of customers who stop doing business with a company over a given period. Also known as customer attrition, churn is a natural part of any business but keeping it low is crucial for long-term growth and profitability. For subscription-based brands, churn is particularly important. If more customers are leaving than joining, the business can struggle to grow, this is often described using the “leaky bucket” analogy. Even with strong acquisition, if too many customers drop off, overall performance suffers. Monitoring churn helps businesses understand when and why customers leave, enabling them to act quickly with strategies that encourage retention and boost customer satisfaction.
How can eCommerce businesses reduce churn?
Lowering churn rate is essential for improving customer lifetime value (CLTV) and driving sustainable revenue. Businesses with high retention rates often outperform those that rely solely on acquiring new customers. Here are some effective strategies for reducing churn, especially in subscription models:
- Offer flexible options: Allowing customers to skip or delay deliveries gives them control over their experience and reduces the chances of cancellation.
- Enable product swaps: Letting subscribers swap items increases satisfaction and supports personalisation.
- Use churn analysis: Identify when and why customers leave by looking at behaviour and feedback. This can reveal pain points and highlight where the experience can be improved.
- Improve onboarding: Clear, engaging onboarding helps customers see value quickly, making them more likely to stick around.
- Enhance customer support: Responsive, helpful support builds trust and reduces frustration, two major drivers of churn.
By proactively managing churn, eCommerce merchants not only keep more customers but also build stronger relationships, improve their brand reputation, and ensure that acquisition efforts aren’t wasted.
