Churn rate is one of the most crucial KPIs a business can monitor regarding its apps and how users are interacting with them. Here, we delve deep into this metric and how you can use it to improve business efficacy.
What is Churn Rate in Marketing?
In the simplest terms, churn rate meaning refers to the percentage of users who are no longer interacting with your app within a specific period. This way, the metric reflects how well your app is able to retain your customers. Based on business goals, you can track various verticals regarding the app, such as users who have simply stopped interacting and users who have uninstalled the app, to determine the user churn rate.
Why Should Businesses Focus on Churn Rate Data?
The biggest reason why keeping track of your app’s churn ratio is important is so you know you are investing in the right areas. If you are investing a lot in your app but your churn rate is high, then it means that your efforts are moving in the wrong direction. If you are not getting sufficient ROI or your users are not showing enough interest, then it is an indication that your strategy needs to change.
How to Calculate Churn Rate?
For calculating churn rate, you first need to determine which criteria you wish to track and gather some data. In terms of the criteria, you may wish to monitor users who are inactive on your app, those who may have uninstalled your app, or opt for any other criterion. Once you have determined the criteria, you need to choose the duration over which you wish to monitor your rate of churn users.
Now that you have these 2 criteria determined, you will need to gather churn data, meaning the following statistics:
- Total customers at the start of the determined time period
- Customers lost depending on the chosen criteria at the end of the time period
Now that you have all the churning data, meaning the above app analytics, at hand, here is the formula to calculate your churning ratio:
| Customers lost at the end of the time period
Total customers at the start of the time period |
x 100 | = Churn rate of your app |
The higher the result you receive from this formula, the higher the number of churned customers, meaning that your customers are not interacting with your app as intended. The most ideal scenario is if you get a result in negative figures, which is good news and indicates that your users are sufficiently interacting with your app and the churn effect is not in place.
How to Reduce Churn Rates?
If you did get a positive figure from the formula, then you need to take measures to reduce your churn rates. So, here are some of the best ways to reduce customer churn, meaning the strategies you need to implement as soon as possible:
- Identify your most loyal customers and target them specifically
- Communicate and engage with your audience proactively
- Keep a consistent track of your churn rate
- Focus your efforts on the right customers
- Focus on creating an experience, not just selling a product or service
- Offer incentives regularly to attract new customers and retain old ones
- Curate a roadmap for your new customers to follow so they don’t get confused
In Conclusion
Churn rate is not just a number, it is a very important tool that can make your business more efficient in the long term. So, understand what this metric is, why it matters, and how you can leverage the results to improve your offerings. This way, you will gradually be able to reduce the rate of churned customer, meaning higher engagement and better outcomes.