What is Churn Research?

Customer churn rate is a term that started in the telecommunications industry and has now been adopted by many service industries. Specifically, it refers to the percentage which results from dividing deactivated customers by total customers. Long distance, local carrier and wireless companies commonly conduct churn research, as does cable television, Internet service providers and advertising directory publishers. Companies in other industries, however, can benefit from examining why their customers leave.

Typical churn rates for larger service companies are in the low single digits, so a change of two percent in churn rate realistically translates into six months of additional service per customer. Therefore, the health of a company often depends on measuring its churn rate and understanding the factors that contribute to customer retention.

Most companies have a good understanding of their churn rate but don't know which key factors affect customer churn and to what degree. Clearly, many types of customer surveys can be used to better understand customers throughout their typical lifecycle, such as customer satisfaction, loyalty and retention. Surveying recently lost customers, however, is often the best approach toward understanding what drives customer churn and how to retain your customers.�

By surveying lost customers, you can learn specifically when and why they left your company, what (if any) competitor they selected and why. The information will give you the quality intelligence needed to create vulnerable customer profiles. These profiles can then be used to flag vulnerable customers (by service plan type, length of service, products in service, geography, demographics, etc.) so that proactive measures can be undertaken to prevent vulnerable existing customers from going to the competition.�

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