What Is Customer Attrition Rate? A Pillar of Retention

June 30, 2022

When it comes to customer retention, it is crucial to understand what is customer attrition rate. Simply put, this is the percentage of customers that a company loses over some time. Why does this matter? Well, if you’re not retaining your customers, then you’re losing out on potential revenue. Not only that, but it costs more to acquire new customers than it does to keep existing ones happy. This makes sense when you think about all of the effort (and money) that goes into acquiring a new lead – from advertising and marketing campaigns to sales pitches and more.

What is customer attrition rate and how can you reduce it? There are several ways, but one of the most effective is by providing excellent customer support. When your customers know they can rely on you for help and assistance whenever they need it, they’ll be much less likely to look elsewhere for their needs.

Of course, offering great customer service isn’t always easy – especially if you don’t have enough staff or resources dedicated to supporting your clients. But even making small changes in this area can make a big difference in terms of reducing attrition rates and keeping your business afloat long-term!

What is Customer Attrition Rate?

Customer attrition rate refers to the percentage of customers who stop doing business with a company. The attrition rate can be used to measure customer satisfaction and loyalty.

What is Customer Attrition?

Customer attrition is natural for any business. A drop in the number of clients is a sign that your business is not doing well.

In software as a service (SaaS), the metric for customer attrition is called “customer churn” and is expressed as the percentage of customers who cancel their subscriptions.

Tracking this key business indicator is important for the health of your company, especially if you’re in the SaaS space.

Although some customer attrition is to be expected, minimizing this key factor will have a significant impact on whether a business is successful or not. Reducing customer attrition should be a top priority for any business looking to achieve long-term success.

Minimize your customer churn rate by making sure your product is meeting the needs of your target market, providing great customer service, and constantly improving your product.

How to Calculate Customer Attrition Rate

Regularly calculating your attrition rate helps you keep track of any changes within your client base. Keeping your customers satisfied is cheaper than finding and attracting new customers.

If you’re noticing that customers are leaving, it’s important to identify the issues and rectify them. This way, you can focus on customer acquisition instead of worrying about losing customers.

The attrition rate is usually determined by calculating the number of customers lost over a specific period.

To figure out your customer attrition, take the total number of customers who signed up at the start of the month and subtract the number you lost in the same period.

Let’s say that a company has 1000 clients at the start of the month, and by month’s end, that number has dropped to 900.

Number of lost customers (churn) = 1000-900= 100

Number of customers at the start of the month = 1000

Customer Attrition Rate = 100/1000 = 0.1= 10%

So this company had a 10% customer churn rate for that period.

Calculate your customer retention or customer churn rates using this formula.

If your retention rate is high, it may mean that you’re providing good customer service.

If you’ve got a high customer attrition rate, it might be because of some fundamental problems, like high prices, poor customer experiences, bad onboarding, or confusion about new features and updates.

If your attrition rate is high, it’s important to understand the root causes of this issue. A detailed customer attrition analysis can help you identify major problems and take steps to address them. Without this analysis, it will be difficult to make improvements and reduce customer attrition.

After you’ve determined your customer attrition rate, the next step is to conduct a customer attrition analysis with your team. This will help you identify the reasons why customers left and take measures to address them.

Types of Customer Attrition

There are two types of customer attrition: active and passive.

Active Customer Attrition

This is when someone has to consciously decide to cancel their subscription to a service provider. This also applies to things like phones, insurance, internet service, news services, and utility services.

Anything you pay a monthly fee for, or for which you maintain an active account.

These can include banks, credit cards, and social media platforms.

Passive Customer Attrition

This pretty much applies to everything you purchase, from cars to food. You don’t need to cancel your membership to stop buying.

Whatever the reason, you don’t have to call the company to tell them you are no longer buying.

It’s important to understand which of these types of customer behaviors describes your customers’ behavior. Average customer attrition rates differ for each, and they require different approaches.

What Causes Customer Attrition?

There are several reasons why customers may stop doing business with you, but the most common ones are:

  • Bad customer fit
  • Poor onboarding procedures
  • Incompetent customer support
  • Poorly defined unique selling point
  • Product glitches
  • Wrong pricing
  • Payment failures

By proactively monitoring customer churn, you can determine why customers are leaving you and take action to win back their business.

This insight is also useful to understand demand trends in the market and ensure that active customers are happy and less likely to churn.

How to Reduce Customer Attrition

To reduce your churn, you need to have a solid customer retention strategy in place. This begins with tracking your retention rate, which you can do with tools like a churn rate calculator.

If you notice a spike in customer attrition, it might be a sign that something is wrong with the user experience.

Did you recently introduce a new feature that users cannot figure out? Or is there some bug that you’ve been struggling with?

When a customer leaves, it can be for a variety of reasons. However, if you notice that a lot of customers are leaving, it’s usually a sign that there’s something wrong.

If you want to ensure customer retention, you need to keep track of their information and react to their input. This entails providing comprehensive training that engages users from the get-go. By doing this, you help your users achieve optimal success with your product or service.

If you want your customers to stay, make sure you provide them with the best product possible. This includes making sure your help desk is easy to access and that there are no glitches. By doing this, you’ll encourage them to engage with you from the beginning.

With proper customer retention metrics, you can develop a data-backed strategy to save customers at risk of churning and turn them into loyal, long-term clients.

Attrition is an inevitable part of business, but you shouldn’t just accept it. Instead, you should come up with ways to minimize it.


What is customer attrition rate? This important metric helps you understand why you are losing customers. Attrition rates can be affected by many factors, but one of the most important is customer support. Excellent customer service helps reduce attrition rates by keeping existing customers happy and satisfied with your product or service. If you don’t have enough resources dedicated to supporting your clients, consider making small changes in this area – even if it’s just increasing communication or offering more helpful information on your website or social media channels. Reducing customer attrition rates should be a priority for any business that wants to stay afloat long-term!

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