What Is a Good Churn Rate for E-Commerce?
The churn rate is a common metric used to evaluate the health of an e-commerce business. Find out how to improve churn rate and reduce customer turnover.
Brody Hallon July 3, 2022.
Churn rate is a metric used in business to measure customer retention or attrition, or the rate at which customers leave a company. It is calculated by dividing the number of customers who left in a given period by the total number of customers at the beginning of that period. This metric is important for businesses to track because high churn rates can indicate that a company is losing customers faster than it is acquiring them, which can lead to financial instability.
Is a High Churn Rate Good?
In the business world, a high churn rate is often seen as a bad thing. A high churn rate means that a lot of customers are leaving your company. This can be costly and damaging to a business' bottom line.
If a company can keep its churn rate low, it may be seen as a sign of customer loyalty and profitability.
This isn’t, however, a hard and fast rule. There are a couple of circumstances where a high churn rate can be expected. For example, if your company is in a competitive industry, a low churn rate can be hard to maintain and a high churn rate is expected. A high churn rate will also likely occur if a business is constantly innovating and introducing new products or services.
What Is a Good Churn Rate?
A good churn rate is typically considered to be between 5-7%, as it indicates that most customers are satisfied with the service and are not leaving. Depending on your churn rate, you may have to implement some customer retention strategies.
If you are having trouble determining churn rate, see our guide here.
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