Customer Churn Rate

What Does it Mean?

Customer churn rates, or attrition rates, refer to the percentage of call center customers who permanently end their interactions with a company in a specific timeframe. This KPI is important for understanding how specific practices, processes, and operations affect customers while highlighting growth roadblocks.

Customer Churn Analysis
A Customer Churn Analysis Sisense dashboard

Why Does it Matter?

Customer churn is a vital KPI to measure because it is directly tied to growth and can underline important facts about rising costs and revenues. It is generally true that retaining customers is significantly cheaper than acquiring them, which can cut into revenues and limit your growth potential. Some level of churn is expected, with industry averages around 20%. However, significant churn is a sign of trouble elsewhere, and can point to deeper operational issues.

How Do You Measure the KPI?

Despite the importance of measuring the KPI, the churn rate calculation is quite straightforward. To measure it, start by selecting the timeframe you wish to study (generally, it is measured over months, quarters, or years).

With that in mind, the formula requires dividing the number of customers lost over the specified period by the total number of customers at the beginning of the period. Once you have the answer, simply multiply it by 100 and you’ll have your churn rate.

What Sources Would You Use to Measure the KPI?

Because it is a satisfaction and success metric, you can use data from your customer service dashboards which is readily available in most cases. This includes data from CRM suites, customer surveys, financial records, and other analytics tools.

Give Me an Example…

Let’s imagine that all other factors relatively equal, you notice that your costs per customer have been steadily on the rise over the previous six months. You don’t notice issues with KPIs such as average speed to answer, average handling time, or other similar metrics.

However, your NPS is not as high as it once was, and you notice that you see more new names than usual on your customer lists. Measuring your churn rate can give you a clear indication that the problem lies in spending too much money onboarding new customers instead of focusing on your existing client-base. This can in turn help you refocus your efforts on retention and customer satisfaction.

What Benchmarks/Indicators Should I Use?

  • Total customers lost
  • New customers
  • NPS customer service

More Customer Service KPIs