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Churn Rate: How to Reduce it on Your Ecommerce Store

In the ecommerce world, churn rate is one of the most important metrics to track. This is because it measures how many customers are leaving your store each month. If you can reduce your churn rate, you will be able to increase your profits and keep your business thriving. In this blog post, we will discuss what churn rate is and how you can reduce it on your ecommerce store.

What is churn rate?

Customer churn rate is the percentage of customers who stop doing business with you over a given period of time. For example, if you have 100 customers and two of them cancel their subscription to your service within the month, your churn rate would be two percent.

There are a number of reasons why customers may churn. They may be dissatisfied with your product, they may have found a better deal elsewhere, or they may simply no longer need your product. Whatever the reason, it is important to try to reduce the number of churned customers as much as possible. Acquisition costs are at record highs so nurturing new and existing customers is essential.

Why is churn rate important?

Churn rate is important because it can have a major impact on your business. If you have a high churn rate, it means that you are losing customers at a fast pace. On the other hand, if you have a low churn rate, it means that you are retaining customers and growing your business. The goal is to lower your churn rate as much as possible.

How is churn rate calculated?

Churn rate is calculated by taking the number of customers who cancel their subscription or stop using your service within a given period of time and dividing it by the total number of customers you have.

The churn rate formula is:

(Lost Customers ÷ Total Customers at the Start of Time Period) x 100.

For example, if you have 100 customers and four of them cancel their subscription within the month, your churn rate would be four percent.

What is a good churn rate?

A good churn rate depends on your industry and your business model. For example, in the software as a service (SaaS) industry, the average churn rate is five to seven percent. This means that for every 100 customers you have, five to seven of them will cancel their subscription each month.

In ecommerce, the physical product quality and usage rate before subscription renews are more critical to your churn rate and therefore it’s much more difficult to have an industry standard.

The inability to complete the product in a timely manner is the most common reason for canceling a subscription. From razor blades or supplements stacking up, to food not being consumed – estimating the correct volume to delivery frequency is key.

How can I reduce my churn rate?

There are a number of ways you can reduce your churn rate. Here are some tips:

-Offer a free trial: Customers may be more likely to subscribe to your service if you offer a free trial. This way, they can try out your product before committing to it.

– Improve your customer service: If customers are unhappy with your customer service, they are more likely to cancel their subscription. Make sure you have a good customer service team in place that can resolve issues quickly and efficiently.

– Offer discounts and incentives: If you offer discounts or incentives, customers will be more likely to stay with your company.

– Improve your product: If your product is not up to par, customers will leave. Make sure you are constantly improving your product and offering new features and benefits that customers want.

– Keep in touch with your customers: If you keep in touch with your customers, they will be less likely to churn. Send them emails, reach out to them on social media, and offer them personalised service to ensure they are using the product frequently enough.

– Make it easy to cancel: If it is difficult for customers to cancel their subscription, they will be more likely to do so. Make sure the cancellation process is easy and straightforward or better yet, give customers the chance to pause or change the next delivery date easily. Better to delay the next payment than lose a customer completely.

By following these tips, you can reduce your churn rate and keep more customers. This strategy, combined with other growth marketing or ecommerce metrics goals such as increasing AOV, will help you grow your ecommerce business.

If you have any questions about this topic or anything else related to ecommerce, feel free to leave a comment below or contact us today. We’re always happy to help!


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