Customer Churn which can also be referenced as “customer attrition, defection, or termination” refers to when a customer or client decides to cease doing business with a company. When a business loses a customer it significantly impacts probability, company growth rate, and even employee morale.
This infographic published by Satrix Solutions details the costliest effects of customer churn by comparing the churn rate between two companies. A customer churn rate can be calculated by selecting a month or year in business and taking the total number of the customers lost in that time period and then dividing that number by the total number of customers in the beginning of the month or year in business.
Ultimately the higher the churn rate, the less profitable a company becomes. Customer churn that is higher than average can easily translate into a valuation loss of tens or even hundreds of millions of dollars.Profit greatly effects the valuation of a business. This visualization recognizes the high importance of analyzing why churn occurs and recognizing your most valuable customers.