Client Churn Rates

Client Churn Rates

We believe that measuring client churn rates is the best way to measure client satisfaction.

“What is the average length of time clients stay with you?”

We’ve often been asked this question and find it a difficult question to answer. Do you ONLY include those clients who have stopped working with you in the calculation or your existing clients as well? From a mathematical and statistical perspective it really only makes sense if you include those whose length of tenure you emphatically know – which means only including those who have stopped working with you.

But this causes countless problems. You may have ten clients who have been using you for twenty years and still use you but only one client who has ever stopped working with you and they stopped after one month!

So a better question to ask is “what is your client churn rate?”

This is the percentage of clients who have left you against the average number of clients you have worked with, over (typically) a twelve month period.

So, if you have worked for an average of 40 clients per month over the last twelve months and in that same time period you have lost 4 clients, then your client churn rate is 4 as a percentage of 40 or 10%. If in the same scenario you have lost 10 clients then the client churn rate is 25%.

By using this method you are giving a truer representation of client satisfaction.

A typical PR agency has a client churn rate of 25% apparently (I was told this by the CFO of a large quoted agency group and is a KPI he uses to assess the viability of a purchase).

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