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Churn Prevention Metrics for Customer Service

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  • 0:00 What Is Churn?
  • 1:09 Metrics for Preventing Churn
  • 2:42 Using Metrics to Prevent Churn
  • 4:12 Lesson Summary
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Lesson Transcript
Instructor: Allison Tanner
Churning, or losing customers, means that your business loses money. This lesson will introduce you to important churn prevention metrics that will help you to stay informed about your customers and keep them coming back!

What Is Churn?

You are the general manager a high profile restaurant in New York City. Excited, you see that you have just added 15 customers to your weekly reservation list. This happy moment quickly fades as a second look at your reservation list reveals that another 15 regulars have not returned in several weeks.

The loss of your customers is known as churn, which occurs when a customer no longer continues to use your services or purchases from your company. Because losing customers means losing money, it is important to track and measure your churn. By tracking churn, you can look for patterns, and find ways to prevent the loss of customers.

As you can imagine, recognizing churn varies based on the kind of company you work for.

  • The restaurant recognizes churn when customers stop making reservations
  • The internet company will recognize churn when customers cancel their services
  • The cellphone service recognizes churn when customers close their accounts

Once you know how to recognize churn for your company, you can begin to track it.

Metrics for Preventing Churn

When your company knows how to recognize churn, you can begin to implement measures that will help you to recognize customers who are at risk for churning.

Consider that you manage the customer service department for an internet company. As your customers dial 1-800-internet, they are given several options asking what they are calling about. Do they have a problem with their service? Is there a problem with their bill?

Using your company's computer system, you can track several measures to determine which customers may be at risk for churning. These include:

  • How often does the customer call?
  • How long is the customer waiting on hold?
  • How many representatives does the customer have to speak with to resolve their issue?
  • Was the issue resolved to the customer's satisfaction?
  • Was the customer satisfied with the interaction?

Now consider that you work for an auto parts store and several of your clients are mechanics who hold contracts with your company. You may want to measure:

  • How quickly does the customer receive the order?
  • Have they reduced the amount that they order?
  • How often do they call with a delivery problem?
  • How often are orders inaccurate?
  • How often do they send back inventory?
  • Were the customers satisfied with issue resolutions?

Although each company is measuring churn differently, their measures are all looking for patterns. The patterns can show you where there may be problems and can assist you in identifying which customers are most likely to churn.

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