Gainsight Glossary

What Is Churn Rate

Every 2 percentage point improvement in retention or up-sell means a 20% increase in equity valuation for subscription businesses. That’s why companies are starting to care more about churn.

Companies have each developed their own lingo, approaches, and measurements to address churn. The real question is: what’s missing? If you have the process in place to collect data on churned customers, you have an opportunity to analyze and identify factors that increase the likelihood of churn. Subscription services companies must have exceptional insight into their customer data in order to quickly remedy situations that cause churn to occur.

Instead of a leaky bucket, let’s think of customer churn as something that results in a doctor’s visit, like recurring migraines or high cholesterol. It’s painful, annoying, and won’t go away. In your annual checkup, the physician asks a few questions; checks your eyes, ears, and heartbeat; and then performs some preventative health procedures.

While the cause of your company’s churn ailment might be indiscernible to the untrained eye, a Customer Success Manager can pick out these insights and improve your company’s performance.

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