Research Runner defines what churn is and how to prevent it.


It is one of those terms used in the corporate world, but to simplify it, it means the loss of customers, when a client leaves or unsubscribes from a service or contract and goes with a competitor. So let’s start at measuring your revenue churn by using a simple formula;

Churn rate = No. of customers lost in a period

                           No. of customers at the beginning

eg: to measure churn over a month. If you have 50,000 customers and 1,000 leave in a month.

1,000 clients lost

      50,000 existing clients

      = 2% monthly churn rate


2% churn rate over 1 month period

x 12 months = 24%

= loss of 12,000 customers a year.

When you look at it this way, its worrying, isn’t it? That’s almost a quarter of your customers leaving each year.

Reasons why customers leave and how to prevent it

All business owners will admit that they have lost customers at some point, let’s face it, we can’t please all the people all the time. There are many reasons why customers leave, some of which are out of our control. It may be due to financial circumstances, competition, a company goes bust or that there is just nowhere to go and the product had ceased.

The main reasons for loss of clients are;

  • bad customer service.
  • too expensive.
  • not delivering your promise.
  • bad attitude.
  • not having that personal touch.
  • lack or loss of trust.

These are issues that can be tackled in-house and must be dealt with immediately in order to reduce churn. It is all about customer retention and not just focussing on getting in new business. Why spend money on expensive marketing campaigns when your existing customers are leaving, it is like filling a bucket with water, when water is leaking out of holes in the bucket.

Customer retention – the statistics

The probability of selling to an existing customer is 60-70%, and only 5-20% to a new prospect. (Marketing Metrics)

It is easy to panic when we see clients leave, it fills most company owners with dread and the instant reaction is to get more business in. This is not to say that you shouldn’t look for more business, but you really need to analyse why your customers are leaving and how to prevent others following suit.

It can cost five times more to get in new business than it does to keep existing clients. (Forrester research)

You are 60-70% more likely to sell to existing customers compared to 5-20% new customers. (Marketing metrics)

How to prevent churn

Who is at risk?

If you have your finger on the pulse and you really understand your customers, you will have a feeling as to which clients/customers are on the verge of leaving. They may drop hints, asking if there are any deals to be done, can you reduce costs/payments, and can they put contracts on hold for a while.

How to deal with the high risk – Prevention is better than cure

Some of the biggest reasons for customers leaving are that they have found somewhere cheaper, they don’t often admit this, but you need to be aware of your competition, know what they are offering, how do you compare and what you can offer your clients that they cannot get from your competitors. Discuss with them what it is they want and if you can meet their demands.

If your client seems unhappy with your service or if the contract has not gone to plan, ensure that you have your best sales person or manager available to settle any complaints, someone who has the power to offer discounts and solutions. The client will appreciate speaking to someone who has the authority to deal with their complaint.

Long term clients – your bread and butter

Don’t forget this group of clients, they are your bread and butter. You need to find a balance between low-risk and high-risk clients. Follow ups are a great way to ensure you are delivering your business promise, a call or email from nowhere, asking how they are doing and if there is anything else you can help them with can make them feel important.

What you should be doing all the time

Communicate, speak and listen – I cannot emphasize enough how important this is, it is quite obvious isn’t it? However you will be surprised how often this is forgotten. Call your clients and ask them if they are happy, is there anything they need. Meet with them occasionally, it is important for them to visualize who you are. If you are in their area, ask to pop in and meet the team. Listen to their concerns and make sure you act on them. Discuss with other team members and managers to see how you can overcome issues.

Engage with your audience – they will want a reason to stay with you. Educate them with your knowledge, keep your business current by writing blogs, offering advice, training and seminars. Promote your business so that you are an expert in your field, this will gain their trust and will build confidence in the relationship.

Targets the right clients in the first place – The only way you can provide the service you offer to its full capacity is by taking on the right clients, those who you know you can offer your service to. Don’t make promises you can’t keep. Research your target audience.

Provide a great customer service – Make sure your teams are trained and know your product and clients. Make sure they are aware of all available discounts, promotions and offerings. Act swiftly as a manager if there are concerns over staff attitudes and work ethic. Offer training for all staff, keep them up to date with your product.

If you feel that your churn rate is high and are concerned about customer retention within your organisation, please contact Research Runner on (44) (0)1279 260 031 or visit our website