Your churn rate is a crucial metric. The churn rate provides insight into your customers behavior. With insight in your churn rate, you can estimate whether your customers will continue to do business with you or if they will leave.
Churn rate – the percentage of customers who stopped doing business with you in a specific period.
In general, it is less expensive to retain existing customers than to recruit new ones. Companies therefore try to keep their churn rate as low as possible. A churn analysis is very valuable because it gives you a great insight into your customers behavior. When we analyze churn, we can distinguish four different types of customers:
Your ERP software contains all the data you need for a churn analysis. We can make predictions based on your sales order and invoice data. Predictions such as when a customer will order again and how much they will order. Often even with a certainty percentage. By categorizing customers according to order volume, revenue, and margin, we can distinguish customers who contribute a lot or little.
Even though all the data you need is available in your ERP software, it can be hard to gain the right insights. This is where business intelligence come into play. Using BI tools, such as Tableau, enables you to combine data in a way that makes it easy to interpret. Using Tableau, we can even combine our sales order and invoice data with a BCG-matrix, which also gives us direct insight into the share of each product in your churn rate. With these analyses you will find out which customers you should give more attention, because you can sell more to these customers or because they may otherwise stop doing business with you.
Make your analyses even more advanced by adding external data. Add, for example, geological, political, and economic influences and developments. This will make your new insights even more accurate.
With our Tableau analyses, we can calculate churn using three different measurements:
Tableau gives you powerful, visualized insights. Below we give you several examples. With this real business intelligence, you can manage your customer department even better. And the marketing department benefits greatly from this as well. Especially if we combine this with the data from the CRM system, which shows the conversion rate of prospects and the success of certain campaigns or promotions.
We will give you three examples of Tableau analyses that provide meaningful insights:
This dashboard below gives you the following insights:
The interactivity on this dashboard is explained using the bullets:
This dashboard shows the churn rate at a selected month. This is contrary to the previous dashboard, which shows churn over time.
The bullets explained:
In this dashboard you can see which customers generate more, less or the same revenue in the current year compared to last year. For the red customers, the revenue in the current year is lower than last year. This is very interesting information for a sales manager, as there is a potential to sell more to these customers. By adding more data to these analyses, such as a customer satisfaction score, this analysis could give insight in which customers are likely to stop doing business with us. A sales manager or account manager can use this information to improve the relationship with these customers so that this can be prevented.
Tableau helps you to analyze your customer churn rate. Analyzing churn rates is valuable for any kind of business. You can start simple, by visualizing the churn rate over time and doing cross-sectional analysis of churn at the current month. Later, you can also start predicting churn which can help you in retaining customers.