What Is Customer Turnover?

Customer turnover, or churn rate, is the percentage of an organization’s customer base lost during a given period of time– usually a month or annual basis. A bad churn rate can be very damaging to revenue and profitability.

Understanding Customer Turnover

Why is it important to understand customer turnover?

Turnover rates provide information about how loyal a customer base is, how customer service affects sales, and even how trends change from one year to the next.

The following are some of the main justifications for being aware of customer turnover rates:

What is customer turnover?

The percentage of clients or customers that a business loses is known as customer turnover. Most businesses research turnover to discover new strategies to draw in or keep customers. This process is also known as customer attrition, churn, cancellation, or defection.

When a customer stops interacting with a business after a certain amount of time, it is called turnover. Since a company needs a steady customer base to turn a profit, attrition prompts an investigation into why a customer left. Turnover rates are used by businesses to determine how they can improve their operations. Customer turnover is another piece of information a company uses to gauge client loyalty and satisfaction.

What causes customer turnover?

Customer attrition is caused by several factors:

Customer Experience

Attrition is affected by a customer’s interactions with a particular brand. Consumers who have positive customer service experiences are more likely to return, while those who have negative ones may completely stop using the brand.

If a customer has a positive experience with the business, they are more likely to tell others about it and persuade them to use its services or buy its products. A brand that offers excellent customer service will lose fewer customers. They are often willing to pay more for the experience.


Many consumers have a price threshold for products. Depending on the sector, price can have a significant influence on whether a customer chooses to stick with a brand or not. Price structure is often set by value and industry standards. A business that recognizes price as a contributing factor to turnover can review their current pricing to alter attrition rates.


Consumer perceptions of a product can affect whether they stick with a particular brand. If customers don’t think your product is something they need, churn may occur. They may also believe your product has problems. Customers may lose faith in your brand if it has previously displayed issues, such as software with technical flaws. Customers must believe your product is both necessary and excellent for retention.


Naturally, competition from rival brands will contribute to some customer churn. Businesses frequently spend a lot of money trying to entice customers away from a rival. Attrition resulting from competition is a problem for any brand, regardless of whether it uses discounts or promotions.

How to calculate customer turnover rate

Follow these steps to calculate customer turnover rate:

The business determines how to calculate the number of customers from the beginning of one period to the end. Unlike retail customers who come and go in a store, the number of customers a sales firm retains is simpler to track. However, achieving the lowest attrition rate is the ultimate objective.

Tips for reducing customer turnover

Companies can lower turnover rates by concentrating on methods for keeping customers:


What is a good customer turnover rate?

To get you started, here are 12 ways you can reduce customer churn.
  1. Analyze why churn occurs. …
  2. Engage with your customers. …
  3. Educate the customer. …
  4. Know who is at risk. …
  5. Define your most valuable customers. …
  6. Offer incentives. …
  7. Target the right audience. …
  8. Give better service.

What causes customer turnover?

A 100% retention rate is always good. Meanwhile, a 15% retention rate is usually bad. Whatever is in between varies by the industry.

Is high customer turnover good?

Product: Consumers frequently choose a product based on how much easier their lives will be made by it in the future. The customer will leave if this product doesn’t live up to expectations or if promised features aren’t provided.

What turnover means?

Customer turnover, also referred to as churn rate, is the proportion of a company’s customer base that dwindles over time. Typically, turnover is measured on a monthly or annual basis. High churn generally hurts a business’s revenue and profitability.

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