How to Reduce Your Customer Churn Rate

Here’s everything you need to know about customer churn—from how to calculate your customer churn rate to how to reduce your customer churn rate for good.

No one wants to see their customer churn rate go up. After all, successfully retaining customers over time is a competitive advantage that helps companies cultivate a loyal brand following, generate customer referrals, and boost profitability. 

So what can you do to keep your customer churn rate from increasing? Turns out, there’s a lot you can do right away that can make a big impact. (Spoiler: It starts with taking a good look at your customer experience.)

In this guide we’ll walk you through our quick customer churn definition, give you a handy formula you can use to calculate your customer churn rate, share some of our top strategies for reducing customer churn, and reveal the real cost of not reducing your customer churn rate. 

What Is Customer Churn? Customer Churn Meaning

Customer churn, also referred to as customer attrition or customer turnover, is the measure of how many customers stop purchasing or engaging with a company’s products and services. For instance, a subscriber canceling their streaming service or a shopper no longer buying from their preferred retail store are both examples of customer churn. 

Customer Churn Rate vs. Customer Growth Rate

While customer churn rate is a measure of how many customers a company has lost, growth rate measures how many new customers a company has successfully acquired. Growth rate is calculated by determining how many first-time customers your business gains within a specific timeframe. A high growth rate is not an indicator of positive business outcomes on its own. A high customer churn rate can cancel out positive acquisition gains. Now let’s take you through the steps of calculating your customer churn rate.

What Is Your Customer Churn Rate? Using the Customer Churn Formula

Calculating your customer churn rate is a fairly straightforward process:

• You need to know the total number of customers you’ve lost over a given time period.
• Once you have the number of customers who have churned, you divide this number by the total number of customers your company had at the start of the same time period.
• Multiply this number by 100 to get your customer churn rate.

Customer Churn Rate Formula 

Customer churn rate = (# of customers lost during a given time period (day, week, month, quarter year, etc.) / # of customers at the start of a time period) x 100

Churn Rate Calculation Example 

Let’s use the customer churn rate formula together to calculate the customer churn rate for Company X. Let’s say Company X has 1,000 customers at the start of the year and they lose 100 customers in the first month.

• # of customers lost during January: 100 
• # of customers at the start January: 1,000  
• (100/1,000) x 100 = 10% churn rate

Steps to Measure Your Company’s Customer Churn Rate

1. Choose Your Desired Timeframe 

Pick a specific period of time you’d like to look at for your customer churn analysis, whether that’s daily, weekly, monthly, quarterly, annually, or all of the above. 

2. Determine What Counts as a Churned Customer for Your Brand

What does a churned customer look like for your business? For subscription-based services, for example, a churned customer might be someone who cancels their paid subscription. For retail brands, a churned customer may be someone who hasn’t made a purchase within a specific timeframe.

3. Keep Track of Your Customer Data

You’ll need to keep tabs on the number of customers you have at any moment in time and track your customer churn rate in real time. Customer experience management (CEM) platforms like Medallia help you monitor what’s happening for your customers across the customer journey and across channels and have customer churn prediction and prevention capabilities to help stop turnover from happening in the first place. 

Take Things a Step Further: Analyze Your Customer Churn Rate by Segment

Now that you’ve calculated your customer churn rate, you can dive deeper by conducting a customer churn rate analysis across key customer segments, such as by geographic region, acquisition channel, age group, or users of specific products or services.

To do this, you simply use the customer churn rate formula above, taking the number of total customers lost from that given group in a given time period, divided by the total number of customers from that group at the beginning of a time period, and multiply this amount by 100. 

A segmented customer churn rate analysis can reveal patterns and trends, giving you insight on which types of customers are more likely to churn. Armed with this information, you can tailor your customer experience and retention strategies in ways that are more effective for different segments.

5 Strategies to Reduce Customer Churn

If your company is losing more customers to the competition than you’d like, here are powerful steps you can take to turn things around. 

1. Improve the Customer Experience Across Channels

Optimizing the customer experience across all channels has a huge impact on boosting customer retention. A 2023 Medallia study of the customer service experience found that 65% of consumers consider switching to a competitor after a negative customer service interaction.

Start by building out a thoughtful customer experience strategy and investing in a customer experience management platform that can help you monitor, analyze, and enhance customer interactions at every touchpoint. Doing so will not only help you reduce your customer churn rates, but also drive ROI, boosting customer retention, customer referrals, and customer loyalty. 

2. Offer Personalized Customer Experiences

If you’re wondering why your customers are churning and choosing the competition instead, consider the types of experiences you offer. If they’re generic and not tailored to the individual, you might be missing the mark and missing out on more business than you realize.

In 2023 Medallia Market Research surveyed 2,000 U.S. consumers about how they feel about personalization and 61% told us they’re willing to spend more with companies that provide customized experiences and even more (82%) said that personalized experiences influence their brand choices. 

In other words, if you don’t take personalization seriously, it’s likely your competitor will—and benefit from your high customer churn rate.

3. Invest in Product Quality, Consider Your Pricing Strategy, and Enhance the Employee Experience

Two Medallia Market Research Studies, the 2025 report Beyond Transactions: The Shifting Dynamics of Customer Loyalty and the 2024 report The State of Brand Loyalty: Demystifying what makes your customers loyal, have found key factors that contribute to loyalty and, on the opposite side of the spectrum, drive churn. CX practitioners we surveyed say that product quality, price, and interactions with unhelpful or unfriendly staff are among the top reasons why customers may stop doing business with a brand. Similarly, when we surveyed 2,000 global consumers, 61% told us when companies have friendly employees that plays a big role in their loyalty. 

4. Collect Customer Feedback and Act Upon It

Your customers want to have a voice, and are ready and willing to help you improve, as 73% of consumers express a desire to leave feedback after a customer service interaction. But gathering customer feedback is a waste of time and resources if you don’t act on it.

A Medallia study of brands with leading customer experience programs found that leading brands are 3.5 times as likely to use their customer experience data to drive actions across the organization. They’re also 26 times more likely than laggards to experience year-over-year revenue growth of 20% or more.

5. Use AI to Deliver the Next Best Customer Experience 

Using AI for your customer experience, including Text Analytics and Speech Analytics, will help you instantly analyze millions of customer data points from across channels and interactions to understand customer wants and needs in the moment and orchestrate the next best action for customers based on their intent. These AI solutions offer customer churn prediction and prevention features to help you predict which customers are at risk of churning, so you can intervene and implement strategies to reduce customer churn.

Real World Case Study: How One Global Brand Reduced Their Customer Churn Rate

The UK-based Zurich Insurance offers a range of general insurance and life insurance products for retail and corporate customers. Operating in a competitive industry, one where customers easily switch providers, the brand saw the potential to invest in the customer experience as a way to reduce customer churn. The company didn’t have tools necessary to monitor and respond to negative customer experience issues in the moment, so they teamed up with Medallia to use our customer experience management platform to give their employees real-time information to make timely improvements, and it paid off: Zurich saw their likelihood to churn drop by 5x and their NPS® score improve by 20 points.

See the full case study here. 

The Cost of Not Reducing Your Customer Churn Rate

A high customer churn rate affects a business’s ability to generate reliable, sustainable revenue from loyal, high-value customers. It also forces leadership to invest in customer acquisition to fill the gap, further impacting the overall profitability of the business. If left unchecked, the negative impacts of customer churn can spiral quickly and lead to several unfavorable outcomes.

1. Decreased Market Share

High churn rates can erode your market position if your business loses customers to the competition.

2. Reduced Customer Lifetime Value

Customer churn directly depletes customer lifetime value (CLV), as churn cuts a customer’s potential revenue stream to your business short.

3. Loss of Revenue

Customer attrition is an immediate hit to your bottom line. But it goes deeper than that. Not only do you lose a paying customer; you also lose the opportunity to nurture and grow your relationships profitably and derive referrals over time.

4. Poor Employee Experience 

Customer experience and employee experience are connected. When customer satisfaction (CSAT) suffers, that can affect employee morale and negatively impact your business’s employee experience.

Beyond Customer Churn: Other Customer Experience Metrics to Measure Brand Health

Customer churn is one way to measure your CX. Other customer experience metrics you can track to evaluate the health of your brand include customer lifetime value, NPS®, and customer satisfaction (CSAT). Here’s a quick overview of each.

Customer Lifetime Value (CLV)

Customer lifetime value indicates the total revenue a business can expect to earn from a customer throughout their entire lifecycle, underscoring the importance of nurturing long-term customer relationships.

• Formula: CLV = (Average purchase value x Purchase frequency) x Average customer lifespan.

Net Promoter Score® (NPS®)

NPS® is a customer loyalty and satisfaction benchmark, based on a single question: “How likely are you to recommend our product/service/company to a friend or colleague?” 

The answers fall on a 0-10 scale (0 being not at all likely; 10 being extremely likely). Promoters respond with 9 or 10, passives respond with 7 or 8 and are not included in the formula, and detractors respond with 0-6. 

• Formula for NPS® = (Promoters – Detractors) / Total respondents x 100

Customer Satisfaction (CSAT) Score

Your CSAT score is an important metric for assessing customer sentiment and is used to measure your customers’ satisfaction with your products or services.

• Formula: (Total number of satisfied customers / Total number of responses) x 100

Improve Your Customer Retention Rate with Medallia

The world’s leading brands leverage Medallia’s customer experience management solutions to predict customer churn risk and implement strategies to improve the customer experience and reduce customer churn rates. Want to see what we can do for your company? Book a demo with Medallia today.