How To Manage, Measure, and Lower Churn Rate​

The best way to understand churn rate is as a bellwether. In practice, that means when you look at churn rate, what you’re looking for are clues as to what’s happening with your customers and product. Armed with that knowledge, your team can leap into action to address anything that’s impacting churn rate.

How To Manage, Measure, and Lower Churn Rate​
How To Manage, Measure, and Lower Churn Rate​

A high churn rate is a problem; but by using intelligent process experience software, your team can leap into action to address anything that’s impacting it and reduce churn rate. 

What is churn rate?

Churn rate is a measure of how many customers reduce or stop doing business with a company over a given period of time. Understanding the rate at which your customers leave is essential to evaluating the effectiveness of your RevOps efforts. Generally, a lower churn rate indicates a higher level of overall satisfaction among your customers. 

The best way to understand churn rate is as a bellwether. In practice, that means when you look at churn rate, what you’re looking for are clues as to what’s happening with your customers and product. Armed with that knowledge, your team can leap into action to address anything that’s impacting it. 

1. Define an acceptable baseline for churn

You need to have a benchmark to aim for, or else you won’t have a sense of how your rates are trending. Decide on a reasonable percentage as a baseline and constantly drive towards it. You’ll know your efforts are effective when you meet or drop below that range.

There’s no hard and fast rule about what an optimal rate looks like, either, but about 5-8% annual churn is within a reasonable range. If you’re creeping up to 10% customer churn, that’s cause for some concern. Monthly churn should be much lower—around 1-2%.

  • You need a process and system for regularly calculating and assessing churn. 
  • Measuring churn against different time periods tells you different things. For example, you can examine churn for a given month by looking at what else was happening during that time.

Tonkean is a process experience platform that can centralize data from your various systems so you have a clearer view into what’s happening and can take action. It’s fully customizable by internal teams, so you won’t be slowed down by the need to rely on IT or dev teams to get started and create and customize your workflows.

2. Know where to look to find problems impacting churn rates

The issues that impact churn rates are typically not mysterious, but you do need to know where to look to uncover and identify them. Effectively tracking churn requires examining lots of related metrics that, taken together, can provide a more accurate picture of what you need to address.

Additionally, disruptions common to any business—new hires or departing employees, contract changes, and so on—can impact rates, so factor those into your evaluations.

  • Effectively tracking churn requires examining lots of related metrics that, taken together, can provide a more accurate picture of what you need to address.
  • Additionally, disruptions common to any business—new hires or departing employees, contract changes, and so on—can impact rates, so factor those into your evaluations.
  • You need a systematic means of surfacing and synthesizing all data points, nuances, and variables relevant to churn.
  • Any usage statistics will help tell everyone on the RevOps team how customers are–or aren’t–interacting with your product.

Tonkean lets you track everything you create in dashboards or team portals. These include who’s completed which tasks, which step a task is on, what’s already been completed and by whom, and what’s still needed.  

3. Communicate and share data across multiple teams

You need strong communication and data-sharing across multiple teams, including sales, marketing, finance, customer success, customer support, and product R&D. Churn rates are affected by any number of factors that touch on one or more of those domains, depending on the specific situation or customer.  

  • You need un-siloed data sharing and communication; all teams using the same tech stack; and defined (and optimally, automated) processes across teams for specific tasks that affect churn rates
  • Ensure that you have a robust data warehouse and analytics solution. 
  • When all teams involved in RevOps are using the same platforms and tools, data-sharing becomes far easier and therefore more powerful. 

As a process experience platform, Tonkean makes it easy to communicate and share data across all the apps your teams use. Tonkean serves as the heart of your tech stack because every other application, tool, and software can work through it. 

When you automate processes and communications through Tonkean, people can ask questions and get notifications and reminders in whatever apps they already use, like Slack, Teams, and email. Tonkean connects with data sources people throughout an organization use, too, like Drive and Salesforce.  

4. Take proactive steps to curb churn before it happens

If you’re tracking multiple metrics and have seamless communication between teams, you’ll be able to see potential churn coming before it significantly impacts your bottom line. 

  • You need a system to flag whenever a customer’s subscription renewal is drawing near and assign check-in tasks to the right personnel in your organization, as well as defined (and optimally, automated) processes across teams to flag, triage, investigate, assign, and course-correct churn-related issues as they begin to appear.
  • The people who are constantly in touch with customers gather crucial qualitative information that doesn’t always fit neatly into a spreadsheet. 
  • Look at customer’s usage statistics to draw conclusions; an issue could have had more to do with the onboarding process than the product itself. 
  • Map qualitative and quantitative data onto your own common sense to triangulate better insights. 

Tonkean is perfect for this sort of critical tracking. Using its no-code software, you can easily set reminders and automatically notify the right parties when they need to engage with a task–like contacting a customer about a subscription renewal–or automatically triage alerts so the necessary people in an organization get looped in at the right time. 

Fortunately, a changing churn rate and its causes are typically not complex. For the most part, it boils down to how happy your customers are with your company and whether or not your product is working for them. If you have a modicum of usage data available and strong communication across teams, common sense and action-oriented responses to problems will ensure low churn rates. 

Find out how Tonkean can help

Start with this template for free!

The best way to understand churn rate is as a bellwether. In practice, that means when you look at churn rate, what you’re looking for are clues as to what’s happening with your customers and product. Armed with that knowledge, your team can leap into action to address anything that’s impacting churn rate.
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