Understanding and managing churn is vital for several reasons:
Revenue Impact: Losing customers directly affects revenue. Even a small increase in churn can result in significant financial losses over time. Customer Lifetime Value (CLV): A high churn rate reduces the Customer Lifetime Value, making it harder to achieve a positive return on marketing investments. Growth Potential: A company with low churn can focus on scaling and acquiring new customers rather than constantly replenishing lost ones. Brand Reputation: High churn can signal underlying issues with the product or service, potentially damaging the company's brand in the long run.