Customer churn The rate can be divided into absolute customer churn rate and relative customer churn rate, so there are two calculation methods for customer churn rate: 1. Absolute customer churn rate: (Number of lost customers/number of all customers) × 100%
2. Relative customer turnover rate: [(number of lost customers/total number of customers) × relative purchase amount of lost customers] × 100%
If the number of customers of a bank decreases from 500 to 475, the number of customers it loses is 25, and the absolute customer loss rate is 25/500 * 100%=5%. The absolute customer churn rate treats every lost customer equally. The relative customer churn rate takes the relative purchase amount of customers as the weight to consider the customer churn rate. If the unit purchase amount of the lost 25 customers is three times of the average, then Customer churn The rate is 25/500 * 3 * 100%=15%. reduce Customer churn Four steps of rate: 1、 Determine and measure its Customer retention rate 。 For example, magazines: renewal rate; University: the rate of first grade to second grade, or graduation rate.
2、 Find out the reasons for the loss of customers and find out what can be improved.
3、 Estimate the loss of profits when it loses these customers that should not be lost. When a customer loses, the lost profit is equivalent to the customer's career value, that is, the profit generated by the customer's continuous purchase within the normal years.
4、 Calculate the cost required to reduce the churn rate. As long as these expenses are lower than the lost profits, the company should spend this money.
