What is the turnover rate?

The  turnover rate  , which means “disconnection rate”, is a metric that allows us to analyze the number of customers who do not buy the goods or services of a company.

This rate may be related to the decrease in the income of a company, due to the decrease in the volume of sales or services provided.

How to measure  turnover rate

The completion rate can be measured by the  percentage of customers who have stopped buying the company’s products  , by the total number of customers who were there before, that is:

Churn = Number of customers who left / Total number at the beginning of the analyzed period x 100%

This measure is most easily adopted in companies that have customer registration systems, or that provide services through subscription contracts, such as in telephone companies.

The rate of disconnections can be compared to the growth rate, which measures the entry of new customers, analyzing whether the company gains more customers than it loses.

In addition, it is possible to understand in which customer segments the fall in the company’s income extended, or even, which products customers stopped buying.

How to avoid increasing the shutdown speed

The first step is to analyze what may be happening in the business processes of the company. In addition to monitoring the sales process, it is possible to consult with some of the customers who have disconnected and try to understand these reasons.

Next, it is necessary to intervene in points that indicate the quality and usefulness that the product may have stopped offering to consumers.

Another factor to analyze is the market where the company operates, paying attention to what competitors are doing and the possibility of lowering prices.

Understand how competitive forces can be analyzed through  Porter’s 5 forces  .