Churn analysis in customer retention

What is churn analysis?

Churn analysis evaluates data to pinpoint where and why customers stop using a product. It's essential for understanding customer behavior and improving retention. By analyzing churn, you can identify patterns and issues that lead customers to leave. This insight helps you make informed decisions to enhance user experience and keep customers engaged.

How to calculate churn rate?

Calculating churn rate is straightforward. The formula is simple: the number of customers lost over a period divided by the total customers at the beginning of the period. For example, if you start with 1,000 customers and lose 100 over a month, your churn rate is 10%.

This metric provides clear insights into specific areas needing improvement. High churn rates can indicate issues in your product, customer service, or onboarding process. By tracking and analyzing churn rates, you can focus on the most critical areas to improve. Identifying and addressing these pain points will help you reduce churn and increase retention.

Examples of churn analysis in action

Example 1: Meditation app

Churn analysis of a meditation app's onboarding flow revealed high drop-off at specific steps. Targeted experiments, such as simplifying the breath exercise, led to significant retention improvements. By focusing on these critical points, the app saw better user engagement.

Example 2: Food delivery service

A food delivery service analyzed retention to understand user engagement patterns. They noticed users disengaged after their first order. Implementing changes like personalized offers and streamlined ordering processes helped reduce churn and improve the overall user experience.