Churn rate is one of the most critical business metrics for the business. A churn rate that is high or increases constantly can be detrimental to the profitability and growth potential of a business. Hence, a good understanding of churn rate will be the key factor for success. A lot of companies are using predictive analytics to create models that forecast churn rate.

To level down churn rate, businesses can apply several methods and strategies. The most basic ones would be improving the company’s performance, maintaining excellent customer service and promoting re-engagements.

Why you should analyze your churn frequently?

1.Higher churn rate means higher CAC (customer acquisition cost)

Customer acquisition cost is the total amount of money you have to spend on advertising and sales to obtain a customer. Technically speaking, every customer has a CAC. As a result, the more attrition there appear to be, the more money you have lost. While it is not difficult to improve existing relationships between your business and clients, investing time, effort and money to find new customers will be considerably more problematic. It does not matter how effective your marketing strategies are, a churned customer will always count as a revenue reduction. You will have to spend extra on getting new customers to compensate for your loss.

Of course, there is no way to keep your business’ churn rate at number zero. What you can do, however, is to keep it as low as possible to minimize the damage, and one way to help is analyzing churn rate regularly.

2. Analyzing churn to lower CAC

To understand the underlying issue of high churn rate, you need to find out the reason why you are losing customers. After that, you can either choose to bring in new customers or improve your business operations. With a better knowledge, you will be able to come up with the most suitable solution to increase your profit.