What is your member Churn rate?

For any business which has a subscription-based model, or a service with a repeating membership fee (such as a leisure or fitness facility), then tracking the total number of total members is one of the important means of measuring success.

Often, with the majority of costs being fixed overheads, the larger the number of members, then the more successful the business has been at generating and retaining its customers and is therefore more profitable.

This is an area we often speak about with our clients in the leisure, hospitality and fitness sectors, just some of our specialist areas.

The growth in members or subscribers ultimately examines whether the number has increased or decreased in comparison to a previous reporting period.

When increasing customer numbers equals greater revenue, then tracking the growth reveals whether the business is expanding or contracting. A high growth rate should be celebrated as a sign of success. A low growth rate may indicate that the business is struggling to attract, win and retain business, sparking a review that may require a strategic change or for additional investment into marketing.

How do you measure your attrition?

Your Churn rate is an essential means of calculating customer retention. Customer churn rate is the percentage of your customers or subscribers who cancel or don’t renew their membership / subscriptions during a given time period. Measuring the rate at which customers churn allows you to identify how effectively you are retaining revenue.

To determine the percentage of customers that have churned, take all the customers you lose during a time frame, such as a month, and divide it by the total number of customers you had at the beginning of the month

Formula:
The number of customers who churned in the period (excluding any customers who both joined & churned in the period or churned & reactivated in a period)
DIVIDED BY
The Total number of customers at the start of that period.

Often expressed as a percentage %.

 

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