Average Churn Rate by Industry: Monitoring Your Business

‘Churn rate’ is a pretty unique-sounding phrase. And if you’ve been in the industry and business world long enough, it will sound familiar. Business churn rates have two meanings - customer retention statistics and the number of staff leaving a business. This means it’s useful for HR, studying your workplace dynamics, and measuring the number of loyal customers. When running a business, you should care about your customer service and workplace quality. Knowing your average churn rate by industry allows you to hold yourself up against a measurable standard.

The churn rate for staffing employment is a lot like calculating the turnover rate of employees at a restaurant. Once you know your rough statistics, you can create better conditions and lower your rate - perhaps with staff incentives. Similarly, with customer churn rate, you can look at ways to make loyal customers, like loyalty programs and restaurant rewards. A negative customer churn rate isn’t the end of the world. However, it might prompt you to learn how to increase customer loyalty.

As you can see, there’s a lot to learn. In this guide, we’ll take you through exactly what the average churn rates by industry are and why they matter. By the end, you’ll feel capable of tackling your churn rate and rate by industry. And you’ll be able to reap all the rewards.

What Is the Average Customer Churn Rate by Industry?

The average customer churn rate by industry is a vital way of measuring the average churn rate by industry. As you know, you have two types of churn rates - customer churn rate and employee churn rate. Customer churn rate is the number of customers that leave a business or service in a given period. Often, businesses measure this over a year. The idea is that the lower the score, the more loyal customers you have and the better service you provide. Therefore, the goal is simple; lower your average customer churn rate.

Of course, how do you know you are scoring high or low? You need an industry benchmark to compare yourself to your competitors. A 0% churn rate would be fantastic, but it really isn’t realistic. So that’s where the average rate by industry comes in. Rate by industry helps you to set realistic goals and expectations. These are the average retention stats by industry in 2023, according to Exploding Topics:

• 84% for media services
• 55% for hospitality and travel services
• 25% for credit and cable

Of these statistics, Exploding Topics explains that 60% of people believe that good customer service is key to customer retention. It also suggests email marketing plays a role in customer retention statistics - with 89% of loyal customers receiving email marketing. This data points to the importance of marketing churn rate. And when improving business churn rates by focusing on customer loyalty, sending emails appears to be the best way forward.

As you can see, customer retention statistics are best for media services. Customer retention is worse for credit and cable industries. Therefore, if you run a credit company, you will aim for retention above 25%. 30-40% would be an impressive retention rate by industry standards.

What Is the Average Employee Churn Rate by Industry?

So, that’s the average customer churn rate. But what about the average employee churn rate by industry? This is the second type of average churn rate by industry that you should measure. It is essential to track how many staff leave your business annually. This stat reflects many factors - including your workplace environment and wage fairness. You should take staff turnover exceptionally seriously. If for no other reason than because the hiring process is expensive and resource-draining. Definitely aim to reduce new hire turnover.

So, what are the averages for the employee churn rate by industry? Reward Gateway has these stats for 2022 turnover rates:

18.3% for tech Over 20% of manufacturing 57.3% for retail 19.5% for hospitals 94% of nursing homes 75% for restaurants

In these statistics, the lower the rate, the better. The stats show the average percentage of staff leaving each industry annually. As you can see, nursing homes and restaurants have the highest turnover or churn rate. This is likely because they attract temporary contracts, such as young adults working during university holidays. However, these industries are notorious for unsociable shifts and intense working environments.

It’s essential to be aware of your industry’s pitfalls and be proactive in reducing the impact of popular issues, for instance, enforcing days off between specific shift lengths for restaurant workers and providing bonuses. Simple things like ensuring fair tips can make a huge difference to employee retention. And you can use the average rate by industry to set realistic employee churn rate goals.

Our advice? Get creative and really think about how you can reduce your employee churn rate. The fewer staff leave, the fewer you’ll have to train and hire.

Average Churn Rate by Industry: Employee vs Customer Churn Rate

After covering the average churn rate by industry for employees and customers, let’s make a quick comparison. What are the significant differences between the two? These two stats are like branches of the same tree - starting with the same notion but going in different directions.

Employee churn rate focuses on the staff turnover rate, e.g., how many staff leave your business in a given time. For instance, you may have 50% of your staff leave in 6 months. Customer churn rate focuses solely on customer retention statistics, e.g., how many customers leave your services in a given time. The churn rates measure two different things, so you’ll get two other stats while the calculations are similar.

Another difference is the motivation behind each churn rate calculation. For customer churn rate, the motivation is to increase the number of loyal customers and the amount of repeat business. This helps to improve your profit and the reliability of your business income. For employee churn rate, this focuses on improving your workplace environment and minimizing staffing disruption. Reducing employee churn rate reduces the financial and time resources you spend on hiring and training new staff.

You may be wondering which one you should focus on first. We suggest letting your workforce size dictate that. If you have a large workforce, focus first on the employee churn rate. If you have a tiny workforce, focus on the customer churn rate. With small workforces, it’s easier to get feedback from your few members of staff and ‘eyeball’ your churn rate. Both employee and customer churn rates have purposes, but it’s up to you to pick which your business needs most.

Average Churn Rate by Industry: How To Calculate Your Business Churn Rate

Knowing your average churn rate by industry is vital for comparing your business churn rates with a benchmark stat. Before calculating your own, you must take that first step in finding your industry average. You can find this information online by cross-comparing existing reports. Of course, make sure to choose reliable information sources. By ‘average,’ it just means the median churn rate in the top-ranking businesses in the industry.

Have you got this information handy? Fantastic. Now you have your benchmark figure, you can move on to calculating your employee churn rate:

1. Calculate your employees at the beginning of a period (e.g., monthly, quarterly, or annually).
2. Calculate the employees you had at the end of this same given period.
3. Subtract the number of employees at the end from the number at the beginning.
4. Divide the total by your employees at the beginning of the period, leaving you with a percentage - your employee churn rate.

And next is how to calculate the customer churn rate. You just use these simple steps:

1. Calculate the customers you had at the beginning of a period (this could be monthly, quarterly, or yearly).
2. Calculate the number of customers you had at the end of your chosen period.
3. Subtract the customers you had at the end from those you had at the beginning.
4. Divide this sum by your customers at the beginning of the month to get your customer churn rate percentage.

With both of these percentages, you then compare them with the average rate by industry. This will tell you whether you have cause for concern and give you a measurable goal to improve your business.

Average Churn Rate by Industry: Why Should You Calculate & Compare Yours?

Why exactly should you care about the average churn rate by industry? We know it can help in basic ways, like reducing hiring costs. But let’s get into the specifics and nitty-gritty details. If you are going to start taking employee and customer churn rate stats seriously, you need some motivation. These are the reasons you should most definitely care about why you should calculate and compare your business churn rates.

1. Improving Average Churn Rate by Industry Improves Customer Retention

The first reason you should care about customer churn rate is that it improves customer retention. Customer retention is vital, creating a more stable and reliable profit income. Keeping customers is also much cheaper than investing in marketing to attract new customers. Some reports show that new customer acquisition costs businesses five times the price of customer retention.

Retaining your customers saves you money long-term and brings your business success and stability.

2. Reduces Expenditure Spent on Employee Hiring

Employee hiring is expensive. There’s no doubt about it. When considering the average churn rate by industry, there are naturally industries with high staff turnover rates. However, the more you can reduce your turnover, the cheaper and more high-quality your staffing will be.

Employee hiring requires money if you advertise and hold interviews out of paid managerial hours. It also requires extensive resources, like time for interviews, advertising, contract drafting, and training. The whole process is tedious. If you can limit this, you’ll have more qualified and experienced staff and less expenditure in terms of resources.

3. Improving Average Churn Rate by Industry Improves Your Brand Image

Knowing your business churn rates is one way of boosting your brand image. Strange, you might think. It is difficult to draw the correlations between the two if you have yet to dive into churn rates fully. But having an idea of your business limitations forces you to take your business morals and values into stronger consideration. Loyalty programs and even staff incentives all contribute to a sense of brand identity. And eventually, this shows to the rest of the world, presenting a stronger brand image.

4. Improves Your Relationship With Customers

By aiming to reduce your customer churn rate, you will inevitably invest in your relationship with your customer base. This is a massive benefit for any business. The stronger your relationship with your customers, the more loyal customers you will get, and the higher your profit. The foundation of any strong business is with its customers, so you’ll only benefit from this relationship investment.

Customer loyalty programs, feedback forms, and customer service conflict resolution are all vital. And all these steps to reduce customer churn rate do so by actively investing in relationships between business and customer.

5. Improving Your Average Churn Rate by Industry Gives You Clear, Actionable Goals

Lastly, calculating your business churn rates and comparing them to the average churn rate by industry gives you goals. Clear and actionable goals are among the best ways to succeed in business. Average churn rates by industry provide a benchmark to measure your performance and try to outperform your competitors.

With this clear benchmark, you can begin setting actionable goals - like outperforming the average by 10%. Actionable goals are much easier to stick to, and you’ll find yourself reaching success quicker.

Final Thoughts: Do You Need Your Average Churn Rate by Industry

So, do you need your average churn rate by industry? No, not necessarily. You can run your business without knowing what the rate by industry is. However, we wouldn’t advise this, as churn rates are one of the greatest success tools. Think of your business churn rates as performance indicators and feedback givers. This is how you will measure your business’ performance regarding HR, employee satisfaction, and long-term customer satisfaction. What could be more important?

Happy customers and staff are the way to create a successful business. And if you take the steps to calculate your employee and customer churn rate, you can almost guarantee success. You’ll have loyal customers and loyal staff, with much more reliable income and fewer surprise quitters and new hires.

Maths isn’t for everyone. Even business owners struggle with calculating stats sometimes. And knowing how to utilize and strategize stats is even more difficult. Would you like extra help understanding the average churn rate by industry? Perhaps you want to know more about building loyal customers through WiFi marketing? At Beambox, we’d love to help. Outsource to us, and let us lead your business on a sparkly new customer loyalty campaign. We are experts in maximizing WiFi marketing to build customer and staff loyalty. Let’s get things rolling today.

Beambox provides the ultimate WiFi marketing platform. We use an all-in-one approach to help you to keep more happy customers. Start your Beambox free trial today, and let us help you to understand and strategize based on your business churn rates.

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