Understanding and managing churn rate is vital for several reasons:
Revenue Impact: A high churn rate directly affects revenue, as losing customers means losing recurring income. Customer Acquisition Costs: Acquiring new customers is often more expensive than retaining existing ones. A high churn rate means increased customer acquisition costs. Business Growth: Sustainable growth relies on a stable or growing customer base. High churn can stifle a company's growth prospects. Market Reputation: A high churn rate can damage a company's brand and reputation, making it less attractive to potential customers.