Customer churn is the number of customers who leave your company over a period of time and stop buying/using your products and services. The customer churn rate shows how well your business is doing and how many customers you are keeping with you.
Why is churn rate important to your company? Looking at the financial aspect, it is necessary to invest 5 times more money in getting a new customer than in keeping an existing one. According to recent research, if you want to bring a new customer to the level of an existing one, you need to invest 16 times more money.
Studying this topic, Harvard Business School published a report stating that, on average, an increase in customer retention rates of just 5% can lead to an increase in profits between 25% and as much as 95%. A similar opinion is shared by KPMG, where they state that customer retention is the main driver of a company’s revenue.