HOW DOES CHURN AFFECT GROWTH?
You work hard to win new clients, but are you prioritizing retention?CASE STUDY
High Churn Rate Cripples Long Term Growth
Summary
A service business client was spending $1000 per month on advertising, paying an average of $30 per lead, and converting 20% of leads into customers.
Our models determined their average monthly churn rate is 3% and average monthly revenue per customer is $254.33.
We forecasted the long term outcomes for 3 monthly churn rates: 1.5%, 3%, and 4.5%.
RESULTS
Reducing churn by 1.5% increases Customer Lifetime Value by over 50%. In this example, that means losing 2 fewer customers each month.
In this case, the client realized hiring a customer service manager to improve retention provided a long term ROI.
Calculating accurate churn rates is impossible without KPI tracking.
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HOW DO WE HELP?
questions we answer
- How do you anticipate when a customer might leave you?
- What lead sources are bringing you the types of customers that are a good fit for your business.
- Which customers are profitable enough to offer discounts or refunds when needed for retention?
how do we do it?
- We track your service logs and history so you can see potential problems with customer accounts before they happen.
- Our metrics dashboard organizes your service appointments in order of profitability so you can see your high priority customers.
- Our models calculate churn rate if you don’t have it measured accurately.
KPIs TRACKED
Customer Lifetime Value
The average amount a customer spends with a business over their entire lifespan. Increasing frequency and transaction size, and decreasing churn rate, increase CLV.
Profit per customer x Average customer lifespan
Cost per Lead
The average cost per new lead.
Total marketing spend/Total new leads
Leads Closed %
The percentage of new leads that become customers.
Total new customers/Total leads
Churn Rate
Measures the rate customers cancel service, close their account, or otherwise leave your business. Improving customer service typically reduces churn.
Lost customers/Total customers