I love churn (attrition) metrics. It’s not that I’m a pessimist. In fact, it’s quite the contrary. I’m a big believer in continuous improvement. And that’s exactly what a churn metric encourages, especially in the wireless, high-speed internet and other subscription-based industries.
Here’s why: A churn metric that’s used universally (and ideally provided to the public) allows companies to 1) determine if they are providing a better consumer value year over year and 2) benchmark their consumer value against competitors.
In most cases, companies with low churn rates are generally meeting the needs of their customer base better than those with high churn rates. There are exceptions. For example, prior to number portability, some older wireless carriers had artificially low churn rates because customers couldn’t port their cell number to a new carrier. That created an artificial barrier to churn.
Still, I find churn rates are a great metric for the whole company to rally around. Not only do they give a picture of the company’s financial health, but they touch every part of the business.
So in order to lower a churn rate, every department must make an all-out effort. At the very least, the company must:
1) Set realistic expectations up front in the sales, marketing and branding efforts.
2) Focus on customer satisfaction.
3) Compete more effectively and strategically for customers.
Of course, I don't think churn metrics are the only metrics to watch. But they are very important, especially for subscriber-based companies.