Churn

Churn refers to the churn rate or attrition rate, or the average number of people that leave the company for a specific period of time. These people can refer to either the company’s customers of its employees.

Determining the customer churn rate is important for any business. It will determine how aggressive company salespeople should be in getting new customers to replace the old ones.

A churn rate that is too high will result in a drop in revenue if the number of new customers coming in cannot compensate for the loss of business resulting from the leaving customers. Determining the exact churn rate isn’t enough, though. Companies should also look at the reasons for a high churn rate.

In some instances, customers have no choice but to leave the company (i.e. death, moving to new place, etc.). In most cases, however, customers leave voluntarily. Some of the reasons why a customer may voluntarily stop buying a company’s product or making use of its service include better competitor rates and/or product offering, poor customer service, and accessibility issues. In cases like these the company can do something to win back the customers and lower its churn rates.

When it comes to employees, a high churn rate is not desirable, since hiring new employees and training them is expensive and time-consuming. Hence, it is up to the human resource department to figure out a way to keep the employees happy by giving proper incentives and a healthy working environment.

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