Churn risk

What is churn risk?

Churn risk is the set of signs that a customer may not renew, such as falling use, a lost sponsor or unresolved service problems. Churn itself is the share of customers who end their relationship with a business in a given period. Churn risk is the earlier warning: the facility manager who championed the agreement leaves, complaints go unanswered, or the customer starts asking for bid documents.

Why it matters to a revenue leader

Lost customers are expensive to replace. In Harvard Business Review, Amy Gallo cites estimates that acquiring a new customer costs anywhere from five to 25 times more than keeping an existing one, depending on the study and the industry. In a services company, churn risk rarely shows up in the CRM; it lives in technician notes, missed visits, billing disputes and changes in the customer's staff. The revenue leader's job is to make sure those signals reach the person who owns the renewal while there is still time to act.

An elevator service company with 300 agreements reviews every account where the customer contact changed, complaints are open, or the customer has asked for bid documents. Twenty-two agreements show at least one of those signs, worth $610,000 in annual value. Each gets a named owner and a site visit before its renewal window opens.