Churn and Bounce Rate

What are Churn rate and Bounce rate?

The Churn rate indicates how much revenue or customers your business has lost, considering the percentage of people who decided not to be a customer or a subscriber during a specific period or even employees who decide to leave their jobs. 

On the other hand, the bounce rate represents the number of people who access a website and then leave it without interacting with its content. 

It’s necessary to monitor these metrics. To make this possible, it's important to use a good CRM to track the customer journey from beginning to end. 

How to calculate the Churn rate and the Bounce rate?

Before calculating the Churn Rate, it is important to choose a specific period. The churn rate equation can be applied in different cases, follow below a case of loss of subscribers:

Exhibit - Churn Benchmarks

Source: ProfitWell.

The Bounce Rate can be calculated as follows:

However, analyzing the Bounce rate, in general, makes it difficult to identify where the problem is. So, it is necessary to carry out a thorough analysis depending on the elements present on the website, such as user navigation and landing pages.

Why is the Churn rate important? And the Bounce rate?

In general, the Churn Rate is important because it represents the way people feel about your business. To improve customer retention, you need to understand how many people are choosing to end their relationship with your product or service so you can decide what you should do to stop it because finding new customers is way more expensive than keeping the ones you already have. 

On the other hand, the Bounce Rate is important because if someone leaves your website without interacting with its content it means that the lead had UX friction and this should impact the conversion rate. In addition, it may even affect the SEO of your website, as Google and other search engines will probably understand that what you are offering isn’t relevant to your audience.

What factors affect the Churn rate and how to reduce it? And what about the Bounce rate?

Some of the reasons that can affect the Churn Rate are:

  • The value of the product or service isn’t clear;
  • The expectations weren’t aligned with the product or service; and
  • The quality isn’t as good as what is offered by the competitors.

As a way to reduce the Churn Rate, it is essential to adopt some practices, such as ensuring that the product is an indispensable part of the consumer's daily life, listening to their opinion, identifying possible risks and delivering a good customer experience.

In the same way, we can identify some of the reasons for the increase in the Bounce Rate:

  • The product didn’t meet the user’s expectations;
  • The User Experience (UX) wasn’t as good as it should have been;
  • or the website could have performance troubles, 

Investing in UI and UX are some of the main steps to reduce the Bounce Rate, as the first impression of the website and the experience that your prospects will have from that contact have a great impact on their continuity and interest in what you are offering.

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