What Is Customer Turnover And How To Avoid It

If you're in business, it's important to understand what is customer turnover and why it matters. Keep reading to learn more about this crucial metric!

If you’re in business, it’s important to understand what is customer turnover and why it matters. Keep reading to learn more about this crucial metric!

I remember when I first started my business, I had no idea what is customer turnover or why it mattered. My customers were happy and I was making money, so everything seemed fine. But then one of my biggest clients suddenly stopped doing business with me and I lost a huge chunk of revenue overnight.

It was a hard lesson to learn, but ever since then I’ve been much more focused on understanding and tracking customer turnover. If you’re not familiar with the term, simply put: customer turnover (or churn) is the rate at which your customers leave or stop using your product or service.

What Is Customer Turnover?

The turnover rate is the rate at which customers leave a business. A high customer attrition rate is very bad for business.

It’s essential to have a clear understanding of which customers are leaving and why, to reduce customer turnover. TTEC uses predictive analytics to identify at-risk customers and take steps to improve customer retention. Our data-driven, personalized approach ensures that your brand can keep its customers happy and loyal.

We help brands identify at-risk customers through predictive analytics and take steps to keep them from leaving. By engaging customers with the right personalized message at the right time, we improve brand satisfaction and reduce customer turnover.

What Causes Customer Turnover?

There are several reasons why customers leave your business.

1. Poor Customer Experience

How customers interact with brands impacts their likelihood of leaving. A negative customer experience is more likely to cause a consumer to leave than a positive one.

A positive customer experience is much more likely to influence a customer to share the brand with others. A customer is less likely to leave a company that offers good-quality service.

They are willing to pay more for the experience.

2. Product Price

Price is a threshold for many consumers and can have a huge impact on whether a consumer sticks with a company.

Companies that identify pricing as an issue can evaluate their pricing structures to see if changes can be made to reduce employee turnover rates.

3. Product Value

What customers perceive about your brand can influence whether they continue to stay with you. Churn may happen if customers don’t see your product as something they need. Keep an eye on how customers perceive your product and make changes accordingly to keep them happy!

If your product has had issues in the past, such as software glitches, it can damage consumer trust. This can lead to customers leaving your brand. To keep customers from churning, you need to show them that your product is essential and good.

4. Competition

Some customer turnover is inevitable due to competition from other brands. However, businesses can take measures to minimize the impact of this by investing in strategies to attract and retain customers.

No matter what type of discounts or promotions you offer, competition can still lead to attrition. This is a challenge that all brands face.

What is Customer Turnover Rate?

Also known as Customer Attrition Rate or Customer Churn Rate. The rate at which customers quit using your product or service in a given time frame.

What is an Attrition Rate?

Attrition rates refer to the number or percentage of subscribers that discontinue their subscriptions in a given period. These numbers must be kept lower than retention rates to achieve profitability.

How to Calculate Customer Turnover Rate

  1. Choose a specific period and find the number of customers at the beginning of that period.
  2. Find the number of customers at the end of the period.
  3. Divide the number of customers at the end of a period by the number of customers at the beginning of a period. For example, if a company has 10,000 customers at the beginning of the first quarter and 8,500 at the end of the first quarter, the attrition rate is 15% or 1,500 in customer turnover.

How companies calculate their number of clients differs by industry. For businesses that retain many long-term, loyal customers, it’s easier to track their customer numbers than for retailers who see many customers come in and out of their stores.

The goal is to have the lowest possible customer attrition rate.

The Benefits of Calculating Customer Turnover

Calculating your customer turnover rate gives you two benefits.

Customer turnover is a metric that enables businesses to manage retention actively.

Additionally, customer turnover allows companies to calculate customer lifetime value.

These are both significant benefits that can help a business improve its bottom line.

Companies can save money by saving their existing customers. As Harvard Business School notes, acquiring new customers is five times as expensive as keeping existing ones.

The importance of understanding why customers leave and taking steps to address these reasons cannot be overstated. Turnover rates are a key metric in this regard. By measuring turnover rates, companies can take proactive steps to improve customer retention and safeguard their revenues.

After all, as the old adage says: “You can’t control what you can’t monitor.”

Turnover is a measure of how likely customers are to leave a business. It is a critical metric for estimating customer lifetimes.

By measuring your retention rate, you can figure out how much each customer is worth to you. This can help you create strategies that will increase your customer’s profits and allow you to earn more money.

Why is it Important to Understand Customer Turnover?

Understanding customer turnover is important for several reasons. It can help businesses gauge customer loyalty, identify areas where the customer experience needs improvement, and track changes in trends over time.

Here are a few of the reasons why it’s important to pay attention to your customer retention rates.

Inventory management: If a company knows it has a high customer churn rate, it can adjust its inventory accordingly. For example, if a business sells perishable goods and has a lot of customers who only purchase once, it will need to order less inventory than if it had a low customer churn rate.

Improve customer service: By understanding what causes customers to leave, businesses can work on strategies to keep them satisfied. This may include improving the quality of products or services, providing more personalized attention, or increasing convenience.

Budgeting and sales projections: It is important to understand customer turnover because it can have a significant impact on a company’s bottom line. If a company has a high rate of customer churn, it will need to generate new sales at a higher rate to offset the losses from customers who are no longer doing business with them.

Identify strengths and weaknesses: Many companies look at their retention rates to see how they’re performing in terms of customer service, customer loyalty, and product satisfaction. They may decide to make changes if they’re not retaining customers.

Retention rate: The retention rate is the percentage of customers who return to a business. This metric indicates how successful the company is at keeping its customers.

Build a better product: If a business knows which features of their product are causing customers to leave, they can work on improving them. This could make the difference between a one-time purchase and a lifelong customer.


In conclusion, it’s important to understand what is customer turnover and why it matters. By tracking this metric, you can help prevent your business from losing valuable customers.


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