Customer attrition, also known as customer churn, customer turnover, or customer defection, refers to the loss of clients or customers. It is a normal part of the customer life cycle, as customers will not remain active indefinitely. Companies often use customer attrition analysis and customer attrition modeling to measure their customer turnover and develop nonlinear attrition causation models. Customer attrition is commonly referred to as customer churn in SaaS, and it is expressed as a rate that indicates the number of customers lost over a given period of time.

There are two types of customer churn: voluntary and involuntary. Voluntary churn occurs when the customer decides to stop buying the product or service, while involuntary churn occurs when the seller decides not to continue a business relationship with the customer.

Customer attrition is an important metric to follow because it provides critical insights into a companys offerings strengths, weaknesses, and opportunities. A high attrition rate indicates a severe problem that needs addressing, such as product or service defects, poor customer service, or inadequate value.

Some common factors that can cause customer attrition include bad targeting and customer fit, inadequate onboarding procedures, less-than-competent customer support, undefined USP, product glitches, misaligned pricing strategy, and payment failures.

To calculate customer attrition rate, the number of lost customers in a specific time period is divided by the total number of customers at the beginning of the period. Customer attrition rate is a critical metric for businesses, especially in SaaS, and it is only as valuable as the context around it.

Reducing customer attrition is essential for the health of a business, and it can be achieved by implementing an effective customer relationship management and retention strategy.