How to Reduce Customer Churn

Customers don’t stay with a business forever. Churn is a natural process tracked by the churn rate metric and can be managed. Marketers must not only monitor how many users are leaving but also know how to prevent the loss of their audience. That’s because acquiring new customers is more expensive than retaining existing ones. Customer churn is analyzed alongside other indicators to build a complete picture.

In this article, we’ll cover what churn rate means, how to calculate it correctly, why customers leave, and how to motivate them to stay.

What is Churn Rate

Churn rate is the customer attrition rate that shows the number of customers who have ceased all communication with a company — purchases, subscriptions, or responses to marketing messages.

This indicator is measured continuously at selected time intervals: annually, monthly, or weekly. Customer churn is a process that can be broken down into three types:

• Unmotivated. Users leave because the brand’s product or service becomes irrelevant to them for natural reasons. For example, a woman stops going to the gym because she moves to another city.

• Motivated. Here, the customer makes a conscious decision to stop interacting with the company — for example, switching to a competitor offering better quality, more attractive prices, and so on. Or they’re dissatisfied with the quality or service.

• Hidden. The customer may rarely interact with the company, but could be exploring better offers and even making purchases from competitors.

How to Calculate Churn Rate

The customer churn metric is tracked to test marketing hypotheses, evaluate the effectiveness of a strategy, assess the product’s value to the audience, forecast future campaigns, and adjust business development plans. The main goal is to maintain company profit and stability.

Churn rate formula:

Churned users are people who haven't made a single purchase during a specified period or haven't renewed their subscription/membership.
All customers — are those who interacted with the brand during the specified period.

How to calculate customer churn:

At the beginning of April 2025, the online streaming platform had 10,467 users. By the end of the month, the active customer base had decreased to 9,976. Let's calculate the churn rate:

(491/10,467) x 100% = 4.6%

What Churn Rate Should Be Considered Normal

Churn rate is not measured in a vacuum. It’s important that the figure is compared to previous similar periods and to the “industry average” — the general benchmark within the sector. The business model, product type, and stage of company development are also taken into account. For example, a startup can't realistically compete on churn with a large corporation.

Only an analysis of multiple factors will provide an objective and meaningful churn rate result.

For example, in April 2024, the churn rate for the the online streaming platform was 4.9%. In April 2025, it was 4.6%. The industry average is 3%. This means the company improved its result, but there’s still room for improvement.

Examples of churn rates by sector:

Related Metrics for Customer Churn Analysis

Alongside churn rate, related metrics are also evaluated to give a more complete picture:

LTV — lifetime value. Shows the total profit a user has generated over the entire period of interaction with the brand. LTV increases when churn rate decreases.

ACL — average customer lifespan (how long a person used your product or service). Reducing churn rate increases this figure.

Retention Rate — customer retention metric. When this number goes up, churn rate tends to decrease.

Company revenue is also considered. If churn is high but revenue remains stable, it may mean more valuable customers are staying.

Other Signs of Customer Churn

Beyond calculating metrics, there are other signs that customers are leaving or about to leave:

• An increase in negative reviews. Customers complain about the product, service, or delivery, and leave low ratings.

• The audience doesn’t respond to your marketing communications. If email newsletters, social media posts, or messenger messages receive no engagement, it may be time to rethink your strategy.

• A decline in the number of purchases. Serving one customer takes too many resources to lead them to conversion.

Why Customer Churn Happens and What to Do About It

To deal with churn effectively, you need to understand the reasons why users leave. If marketing automation is used, data can be pulled from analytics systems. Audience segmentation, surveys of former clients, and analysis of online reviews are also helpful.

Once the reasons are clear, the company can build new strategies to retain or win back users. The same approach applies to churn prevention — when customers haven’t left yet, but clear warning signs are present.

Reasons for Customer Churn

Price

An increase in the price of a product or service is a serious reason for customer churn. Especially if the price hike is significant and sudden, customers may start looking for cheaper alternatives from competitors.

What to do

First, it’s important to talk to customers about pricing openly, rather than suddenly increasing the price without clear reasoning. Second, the customer should understand the value of the product they’re paying for. In other words, the price increase must be justified. To support this, revise the marketing strategy to clearly communicate the value and benefits of the product.

Low Level of Customer Experience

When customers are unhappy with how they interact with the brand, they leave. The problem might lie in support team performance or delivery issues. A broken or slow website, the inability to switch from a chatbot to a real person — any difficulty along the customer journey worsens the shopping experience. Minor shortcomings eventually snowball, prompting customers to leave.

How to create a customer journey map? Read more in this article.

What to do

Conduct an audit of your current customer communications and continue monitoring service quality along the entire user journey. Clearly define service standards. The ideal brand interaction should be simple, and the onboarding process should be quick.

It’s crucial to simplify the customer journey as much as possible and make it completely transparent — especially if you use an omnichannel approach.

Product Quality

Flaws in the product you’re selling can also be a reason for customer churn. This is especially relevant for IT services. Customers won’t wait forever for you to fix bugs, improve performance, or resolve other issues. Most likely, they’ll start looking for alternatives and switch to competitors.

What to do

First — communicate with customers about issues instead of keeping silent. Keep users informed about timelines for problem resolution, and let them know what’s happening. Notify them immediately when the issue is fixed. Additional bonuses “for waiting” can also help. The customer should not feel like they’ve spent money without getting the value they expected.

Second — don’t wait for problems to arise; take preventive measures. The goal isn’t to constantly chase improvements and new features, but to devote time to stability and strengthening core functionality.

Competitors

Customers never promised to stay with you forever. If a more affordable and convenient solution appears on the market, they will leave. Competitors know this and are always looking for ways to outpace you. That’s why this is a relevant cause of churn for any business — unless you're a monopoly.

What to do

Keep an eye on what your competitors are doing. But don’t just copy them — focus on what makes your product or service better. Find your USP that no other company offers. This will help you stand out and distance yourself from the competition.

It’s also important to approach pricing wisely. It should be justified and competitive. Analyze the cost of similar products and services on the market and adjust your pricing if necessary. Remember: price is one of the key reasons customers may switch to competitors.

Audience Quality

Sometimes customers leave simply because they’re not your actual target audience. If people don’t truly need your product, there’s no way to retain them. This kind of audience reaches you through misaligned marketing campaigns: giveaways for subscriptions, misleading ad offers, or subscribing to a newsletter just for a bonus without real buying intent — these are all ways to attract the wrong type of customer.

What to do

Define who your real customers are, what they want, and where they are. Study the deeper needs of your audience and the problems they expect your product to solve. Use collected data, for example, from your CDP. Also, run surveys: find out what customers want, what they like and dislike. You can even ask questions during the trial phase. That way, your future campaigns will be more accurate and attract the right people.

Loss of Value

If a product stops delivering value or fails to meet expectations, the customer stops using it. This is especially relevant for B2B services, which are often budgeted in advance. When their functionality doesn't provide direct or indirect benefits, businesses drop them or look for cheaper alternatives.

What to do

Continuously measure customer satisfaction with your product (for example, using NPS). Also, study user needs during product use to track emerging issues and quickly find solutions.

Additional value can come from educational content about your product — lessons, guides, helpful articles. Another great bonus is offering a free feature that’s genuinely important to users.

Don’t forget about simple onboarding, so that customers can quickly get started with the product instead of getting frustrated during the introductory phase where nothing is clear.

How to Analyze and Predict Churn

To retain customers, it’s not enough to simply react when they leave. You need to be able to spot early signs of declining interest and understand what factors influence it. Let's go over a few methods that help analyze and predict churn.

Cohort Analysis

Divide customers into groups (cohorts) by registration date, acquisition channel, or other characteristics to understand which groups churn the fastest. This helps identify when and where churn occurs, and what precedes it.

For example, a platform divides customers into cohorts based on registration source: targeted ads, SEO, or partner newsletters. Cohort analysis shows that users who came via SEO are more likely to become paying customers and stay longer. Meanwhile, users from ad campaigns tend to leave within a month. The company reallocates its budget and strengthens its organic acquisition channels.

Behavioral Pattern Analysis

Regularly collecting data on user actions allows you to identify patterns.

For example:

• the customer logs into the product less frequently;

• has stopped opening emails;

• does not use key features.

This can indicate that interest is declining. By identifying such patterns, you can set up automatic responses — a personalized email, a phone call, or a discount offer.

Collecting and Analyzing Feedback

Systematic feedback collection helps identify issues before the customer leaves. What to use:

• mini-surveys after key actions,

• NPS forms to measure satisfaction,

• surveys after canceling a service or unsubscribing from emails,

• communication through support chat.

This way, you can identify reasons for dissatisfaction in advance and respond in time.

Predictive Modeling Using Machine Learning

If you have a large volume of data, you can build a churn prediction model. It analyzes many indicators and assesses the likelihood of each customer churning. These models help automatically identify at-risk groups and set up targeted retention scenarios.

Risk Scoring (Churn Risk Scoring)

Even without complex models, you can set up a risk scoring system: define a set of criteria for the system to assign a churn risk score to each customer. For example:

• hasn’t logged into the product for >7 days — +1 risk point

• not using key features — +2

• not responding to emails — +1

Such scoring allows you to quickly identify customers who need attention and trigger automated or personalized retention actions.

Methods to Reduce Customer Churn

Reducing churn is not a one-time action but a systematic effort involving customer experience, product, and communications. Let’s explore key approaches that help retain customers in practice. These recommendations are suitable for digital products, SaaS services, educational platforms, entertainment, and other online services — formats that involve user accounts, activity, and regular interaction through an interface.

Effective Onboarding and Training

Most churn happens in the early days — when the customer hasn’t yet understood the value of your product. Onboarding helps reveal that value as early as possible.

Key elements:

• step-by-step guidance after registration;

• reminders and tips throughout usage;

• webinars, tutorials, built-in tips, and videos;

• quick response to inactivity from new users.

Training center and wizard in Pixso

Automated Response to Decreased Activity

When a user begins to lose interest, you have a chance to step in. To avoid missing the moment, preconfigure retention scenarios in your marketing automation system:

• Reminders about unfinished actions. If a user started but didn’t complete an important step — like placing an order or creating a project — remind them with a personalized email or push notification.

• Response to churn risk. If you're using a churn prediction model or tracking behavioral signals (like decreased activity), automatically notify account managers or trigger retention workflows.

• Reactivation scenarios. If a user hasn’t logged in for a while or has stopped opening emails, try to re-engage them — send useful content, a personalized recommendation, or a special offer.

Thoughtful Unsubscribe or Cancellation Process

When a customer decides to leave the service, it’s important not only to make the process easy but also to remind them of what they’re losing: accumulated bonuses, access to exclusive content, personalized benefits, or their status in a loyalty program.

If it’s about unsubscribing from communications (and not fully canceling the product), offer alternatives:

• change the frequency of emails,

• temporarily pause the mailing list,

• select only topics of interest.

Improving Customer Service and Support

Fast and high-quality support is one of the main factors influencing loyalty. If a customer finds it hard to get help or has to repeat themselves to different agents, they will leave.

What helps:

• training the team to handle objections and conflicts;

• implementing a unified knowledge base;

• automation: chatbots, quick reply templates, tracking request history;

• proactive support — when you detect and solve an issue before the customer notices it.

Loyalty Programs

A well-structured loyalty program strengthens the connection between the customer and the brand. It not only increases purchase frequency but also reduces the chance of switching to a competitor.

What can work:

• rewards for repeat actions,

• tiered privileges,

• exclusive offers for regular customers,

• internal currency that can be exchanged for products or discounts.

Omnichannel Approach and Gamification

It’s easier to retain a customer if you’re present where it’s convenient for them: email, push notifications, messengers, SMS. The key is consistency and timing of messages.

Gamification elements also help boost engagement:

• earning points, levels, achievements,

• quests with rewards,

• engagement through challenges and time-limited promotions.

Summary

Every business faces customer churn, which is measured using the churn rate. This metric is tracked continuously — weekly, monthly, or yearly — and compared with previous periods and the industry average. Calculating churn rate is essential for adjusting strategy in order to retain customers or prevent churn. Reasons customers leave include: price increases, poor customer experience, insufficient product quality, better offers from competitors, loss of perceived value, or simply because they were never the right fit for your product to begin with. To reduce churn, it’s important to analyze the reasons behind it, maintain ongoing communication with your audience about issues, study their needs, improve both service and product, monitor competitors, and differentiate yourself from them.