Describing the example scenario
Customer churn is a phenomenon where customers voluntarily or involuntarily stop doing business with a company. It affects subscription-based businesses such as Software-as-a-Service (SaaS), media streaming, telecom, and others as well as non-subscription-based businesses such as retail, hospitality, travel, and others. A non-subscription-based business relies on new customers and repeat purchases from existing customers to generate revenue. Their business model is transaction-based, where repeat purchases are not guaranteed.
In contrast, a subscription business has a customer generating a steady stream of revenue for the duration of the subscription. Losing customers implies lost revenue. Measuring and reducing customer churn is more critical to a subscription-based company as its business model is highly dependent on the long-term relationship with its customers.
It is more expensive to acquire new customers than to retain existing ones. The...
