Customer Churn
Definition
Customer churn is the percentage of customers who stop doing business with a company over a given period, usually measured annually.
What Customer Churn Means for Your Business
What it means
Churn is the flip side of retention. If 1,000 customers started the year and 220 did not come back, churn is 22%. It is the leak in the bucket that marketing has to overfill just to keep revenue flat.
Why it matters
Churn is where money disappears. Most shops obsess over new leads while ignoring the back door. Dropping churn by 5 points can be worth more than adding 20% more leads because retained customers are cheaper and higher-margin.
How contractors use it
Shops track churn by cohort and segment. They dig into why customers leave, fix the biggest drivers, and use maintenance plans, follow-up contact, and proactive service reminders to keep customers engaged.
Real-World Example
An HVAC shop identified a 28% annual churn rate among first-time service customers. A simple 30-day follow-up call program cut churn to 19% and kept roughly 140 extra customers per year worth about $420,000 in lifetime value.
Related Terms
Customer Retention
Customer retention is the percentage of customers who continue doing business with a company over a defined time period, usually measured annually.
Customer Lifetime Value
Customer lifetime value, or CLV, is the total amount of revenue a customer is expected to generate for a business over the entire duration of the relationship.
Membership Plan
A membership plan gives customers priority service, discounts, and perks in exchange for a monthly or annual fee.
NPS (Net Promoter Score)
Net Promoter Score, or NPS, is a 0-to-100 metric that measures how likely customers are to recommend a business to friends and family.
Reputation Management
Reputation management is the ongoing practice of monitoring, earning, and responding to online reviews to maintain a positive public image for the business.
Put This Into Practice with Free Software
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