Hi,

How much churn of one's typical customer base is typical, do you think...oh, say percent of customers per month, year or whatever?

Customers can easily switch host, true -- but what percentage do? How long do you think the average customer in a given price range stays with the same host?


Thanks,

Louis

Hi Louis,

It is pretty much impossible to put a percentage on it. Way too many variables. All I can say is that if the turnover rate is growing faster than the new sales, you've got a trend that need to be analyzed.

Generally speaking, as your customer base grows, so does your turnover rate. They go hand in hand.

I can't speak for industry averages as I haven't a clue, but our own churn rate is a little less than 5% since March 2000 when we put up the shingle.

In that time we've dropped prices once, and increased our account features once (roughly a 30% price drop and a 100% account stat rise) due to smaller operating costs per account.

Of those a high percentage of current accounts are long term (6 months or longer) though with new signups that's always going to be a hard figure to nail down.

Now that's just us. Depending on the company those figures are going to sway left and right all over the place depending on how they do things.

We've maintained a low churn mainly due to correcting our business to meet market demand (within reason) and to our customer's advantage. Simply put as our profit margin increases we adjust it to stay at an even level passing on the savings to the end user. It's win-win.

We've never gone for loss-leading, or gross overselling. Support is steady and controlled and easy to meet demand with which keeps those who do need support happy.

Our prices also take into consideration occasional overuse by some users, and there's a buffer area there to handle it. As a result we don't come down too heavy when it happens. The business is run as a friendly group of people, and is reflected in our support of customers. As the public face of our business I've even been blessed a few times by our customer base *lol*

Why do I mention all of this? Simple.. your churn rate is going to be due to a lot of different reasons. Hitting people hard for extras, abusive tech support, as well as the usual suspects of poor traceroutes and ping times, not to mention the big no-no.. server down.

Churn rate often has as much to do with the host companies people skills as it does with their technical knowledge.

Greg Moore

Greg summed it up above, it all depends on the products and services offered and how the company operates.

You would expect a company that offered very cheap virtual hosting with little or no support to have a higher churn rate the a company that offered dedicated servers simply because of the set up costs when moving.

Anyway, below are a few published figures from two very different companies:

Communitech Churn ranges from 2 percent to 2.5 percent.
Digex Churn 4 percent (in 3Q01).

Between 5-10% a year.

I probably have an extrememly high churn rate, lots of wanabee hosts sign up for a reseller plan then a couple of months later cancel because they arent making a profit.

Getting them is the 'hardest' part - especially the first 50.

Retaining them depends on a number of factors -

Support: They may get better but it depends on their level of knowledge and the type of site / software they wish to install.
Cost: May be cheaper elsewhere - but I don't think this is a major factor in changing for change sake.
Service: You'd be suprised how tolerant people are when you keep them informed.
Inconvenience: If they have a large or complicated site, then uploading and changing host records / e-mail account..... can be more of a hassle than it's worth.

To sum up - once they're on board (the hardest part) if they start leaving - it's time to look at the service your offering ;) That's not a knock on the other posters here, who have stated other valid reasons for customers leaving.

I take it you are calculating churn as the total number of subscribers who cancel (involuntarily or voluntarily) from a service during the set period, expressed as a percentage of the average number of subscribers during that period.

Example: 10 Closed accounts and 1000 active customers during a one month period would be 10/1000 x 100% = 1% of monthly churn.

Many people never calculate churn correctly. Some will not include Term violators or yearly renewal cancellations, or 30 day guaranteed customers, etc... So the numbers are lower then the true rate.

Also, for those posting churn, and if it was done correctly, and it is truly yearly, then your rates are really low for standard shared hosting. Those are very low yearly churn rates, so it means you guys are doing something right. :)