How to reduce churn and boost retention in 2025

Customer churn is one of the most pressing challenges for businesses today. Whether you’re in loyalty, marketing, or sales, finding effective ways to reduce churn and retain customers is essential for long-term growth.

In this guide, we’ll walk you through what churn really means, how to measure it, and the twelve actionable strategies top-performing companies use to keep their customers coming back.

Understanding customer churn rate and why it matters

Customer churn rate refers to the percentage of customers who stop doing business with you during a given time period. It’s calculated by dividing the number of customers lost by the total number of customers at the start of the period.

This isn’t just a metric—it’s a red flag for deeper problems. Losing customers regularly means you're stuck in a cycle of acquiring new ones just to stay even. That’s expensive, inefficient, and unsustainable over time.

In fact, the hidden cost of churn goes far beyond lost sales. Customers who leave take future upsell and cross-sell opportunities with them. If you're not reducing churn consistently, you may find yourself fighting a losing battle each quarter—especially when annual churn rates come into play.

Based on the State of Customer Churn study, the average rate of customer leaving a business is 6.58% per year. This means that a business could lose up to 65% of its customers in a single year.

Most of the time, people leave because they don't get what they expect. That points directly to retention gaps—not acquisition problems, reinforcing why understanding customer retention is critical to sustainable growth.

Focusing on goal success and customer satisfaction is important if you want to keep customers interested in your brand and keep them from leaving.

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Calculating churn rate and know where you stand

To successfully reduce churn, you must first know your average. To find the churn rate, follow this formula:

Churn Rate = (Lost Customers / Total Customers at Start of Period) × 100

Say you had 500 people at the beginning of Q1 and only 475 at the end, you lost 25 customers. Below is your churn rate:

25 ÷ 500 = 0.05
0.05 × 100 = 5% churn rate

A churn rate of 3–5% is typically considered healthy, especially in SaaS. Still, companies that do really well try to get it as close to 0 as they can.

Average churn benchmarks:

• B2B: 6.7%

• B2C: 6.6%

• B2B2C: 2.85%

• SaaS: 5.2%

• Overall: 6.58%

These numbers help put your churn in context—and pair well with tracking customer lifetime value (CLV) to fully understand the financial impact of churn. Companies can spot early warning signs of churn and cut it down before it hurts revenue by keeping an eye on these benchmarks on a regular basis.

Practical strategies to reduce churn and strengthen retention

You’re not powerless against churn. Here are twelve practical ways to reduce churn—starting today.

1. Figure out why churn happens

2. Proactively engage your customers

3. Educate and onboard with care

A strong onboarding experience is one of the easiest ways to reduce churn in the early stages of the customer journey. You can help your users by giving them training, how-to films, and workshops. An effective training process can greatly lower early loss by letting users quickly see the value.

4. Identify at-risk customers early

Monitor engagement patterns. Inactive users, support-heavy accounts, or those without recent touchpoints are waving red flags. Identifying them lets you intervene before it’s too late. Early interventions are one of the most effective ways to reduce churn among disengaged or uncertain users.

5. Prioritize your most valuable customers

Use segmentation to identify high-revenue, loyal customers—and treat them accordingly. Loyal customers are not just worth more; they’re more likely to stay if they feel valued.

6. Offer incentives strategically

If you use them carefully, discounts and special deals can work. Make sure that the costs of keeping the customer don't exceed their long-term value.

7. Attract the right customers

You'll lose more customers if you get customers who are likely to leave, like people looking for freebies. Change your attention to people who are a good fit and value long-term solutions.

8. Deliver exceptional customer service

The main reason people leave is bad service. Oracle says that 70% of people leave because of bad experiences. 58% of people will never come back after just one bad experience. Set greatness as your setting.

9. Take complaints seriously

10. Assign your best people to cancellation cases

People shouldn't be able to leave without talking to you. Give your best sales or customer service reps the skills and knowledge to deal with cancellations. They will often be able to make things right.

11. Highlight your competitive edge

Remind customers of what sets you apart. Whether it's better support, integrations, or pricing transparency—make sure your unique value stays top-of-mind.

12. Encourage long-term contracts

Monthly plans offer flexibility, but they also make it easy to leave. Annual contracts give customers time to integrate your product and see its full value—leading to deeper, more stable relationships.

Final thoughts: Reducing churn is everyone’s job

Customer retention isn’t a one-time fix—it’s a continuous strategy. By measuring churn regularly, listening to your customers, and applying these twelve proven strategies, you can steadily reduce churn and drive long-term growth.

Start by assessing your current churn rate, then apply one or two of these strategies where they’ll have the most immediate impact to reduce churn and improve customer loyalty.

Ready to go deeper? Start by exploring our other customer loyalty blogs, or learn how to set up a successful loyalty program and keep customer churn under control.