Customer Churn is a business problem that is imperative to mitigate in order to scale a business.

Churn – which means how many customers a business is losing – has a large and direct effect on the bottom line of a business.

To better understand the need to reduce customer churn, let’s explore two fictional organizations, “Acme Sports Club” and “Rising Stars Sports Club”.

CHURN 2

Both clubs currently have teams of 20 players each at the 5th, 6th, 7th, 8th, 9th, 10th and 11th grade levels.

When a family joins either club in 5th grade and stays through high school, the club stands to make 85-90% of their overall revenue from that family in renewals. Conversely, only 10-15% of revenue from that family results from their initial, or sign-up year.

As such, both clubs should have a rock solid plan in place to make sure they are addressing the unique needs of each family in order to ensure they are getting the value they need to renew.