What is Customer Attrition?
Customer Attrition KPI is a metric used by businesses to measure the rate at which customers cease doing business or discontinue using their products or services over a given period. It is also commonly referred to as customer churn, turnover, or loss rate.
Customer attrition is an important digital marketing KPI because it directly impacts a company's revenue, profitability, and long-term growth. Monitoring and managing this rate can help businesses identify areas for improvement, create targeted retention strategies, and ultimately maintain a loyal customer base.
Why is Customer Attrition important?
By regularly monitoring the Customer Attrition KPI, businesses can better understand their customer lifecycle, focus on areas where customer satisfaction may be lacking, and work towards reducing churn, which ultimately contributes to sustainable growth and success.
While in a perfect world, all users would remain customers throughout the business lifetime, this is unfortunately not the case. Over time, customers eventually drop off, and keeping track of the rate at which your customers are doing so is crucial.
Customer Attrition Rate Formula
To calculate the Customer Attrition KPI, you can use the following formula:
Customer Attrition Rate = (Number of customers lost during a specific period) / (Total number of customers at the beginning of the period) x 100
For example, if a company has 1000 customers at the beginning of the month and loses 50 customers by the end of the month, the customer attrition rate would be:
Customer Attrition Rate = (50/1000) x 100 = 5%
Example of KPI target
CEO, Sales Manager, Marketing Manager
Customers lost in a given time period
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