What is Customer Attrition?
Customer attrition is the loss of clients or customers. It is commonly presented as a percentage over a period of time. This metric is very important when measuring a company’s performance. Customer attrition is also commonly known as customer turnover, customer churn, or customer defection. Companies will try to identify and distinguish between voluntary churn versus involuntary churn. Voluntary churn is when a client or customer chooses to discontinue their buyer-seller relationship with a company, whereas involuntary churn is when circumstances force a client or customer to end their buyer-seller relationship.
How to Calculate Customer Attrition?
Number of clients lost by the end of a period (clients at beginning of period- clients at end of period)/ Number of clients at the beginning of the period
Example: Company XYZ had 500 clients at the beginning of the fiscal year 2016; at the end of the year they had 400 clients, therefore 100 clients were lost.
100/500 = 20%
Company XZY’s attrition rate in 2016 was 20%.