Calculating Customer Churn Rate
Customer churn rate metrics are important for the success of Customer Success teams. Churn rates are not easy to calculate because it is incomparable across different industries. Businesses that sell to SMBs have a naturally high churn rate due to the high rate of churn of the customers’ businesses themselves. Moreover, businesses with annual or longer-term contracts often hide churn rates for a long period, versus month-to-month businesses, which constantly expose them.
Customer Churn Formula
To calculate a customer churn rate, you need to determine the following attributes of a healthy customer.
- Executive relationship: How is the relationship with the key sponsor
- Usage frequency: How often is your customer using the product or service
- Key feature usage: Is your customer using your key / differentiated features
- Training: Is your customer trained on product features
- Support: Is your customer having a positive experience with your Customer Success team
Gainsight is a customer success platform that enables Customer Success teams to assess the health of your customer base and determine factors that will reduce churn rates over a period. Using Gainsight customer intelligence, you can proactively manage retention and identify upsell opportunities.