Churn Rate

So, recently I roasted a lawyer so good that she complimented me by saying that this should be my full-time job as I am epic at it. This coming from a person who essentially is paid to debate, actually meant a lot. I told her that unfortunately, I got too fancy degrees to justify that path to society. In less than an hour of the roast, I had a quintessential first date in every sense. The spontaneity of me dropping by post-midnight in a perfectly dim-lit room covered with photographs and a beautiful painting made by her was the perfect meet-cute moment for me. She is a lawyer with a strong viewpoint and quite well-read, which was evident from the room shelf filled with books. Not going by the generic romanticized definition of beauty, out of the three components of love (emotional, intellectual, and physical) discussed in the triangular model, one was off the charts. I didn’t even realize how the whole night passed away in her company.

Anyway, coming to the MBA concept of ‘Churn Rate‘. In its broadest sense, it is a measure of the number of individuals or items moving out of a collective group over a specific period. Churn rate, when applied to a customer base, refers to the proportion of subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales, and/or marketing by the competition.

It is also known as the rate of attrition and most commonly signifies the percentage of service subscribers who discontinue their subscriptions within a given time period. In most industries, many brands compete, making it easy for people to transfer from one provider to another. The churn rate not only includes when customers switch but also includes when customers terminate service without switching. 

Churn is closely related to the concept of average customer shelf life. For example, an annual churn rate of 25 percent implies an average shelf life of four years. An annual churn rate of 33 percent implies an average shelf life of three years. The churn rate can be minimized by creating barriers that discourage customers to change suppliers (contractual binding periods, use of proprietary technology, value-added services, unique business models, etc.), or through retention activities such as loyalty programs to increase the customer lifetime value (LTV).

A couple of interesting insights can be drawn in the context of modern-day dating from the concept of churn rate. Firstly, while gauging a potential partner, it is important to know their churn rate. It translates into the number of romantic encounters they had in the past and at what frequency. More weightage is to be given to the recent past.

When in a relationship to prevent the me-too brands from preying on the customer (date), focus on oxytocin, and the bottom two quadrants of KF4D.

The number of dating partners someone had in the past, the duration of those relationships, and the reasons for calling it off are a couple of data points for the churn rate. A number of insights can be drawn from the data points as the past behavior in the majority of the cases can predict future actions. So you can see if that goes in sync with your plans.

Another important data point is the duration of singlehood (terminate service without switching). Although a high churn rate might be a red flag for a serious commitment, an extremely low churn rate (dormant) can also indicate the inertia against getting involved with anyone. With the passage of time, one becomes too comfortable in singlehood, and breaking the inertia might be a hard task. So, you can tread the path and weigh your options accordingly.

As words<actions<patterns, this helps you in making an informed rational decision. Secondly and more importantly, a lot of us are stuck in relationships with toxic partners due to the loyalty programs that our society has imbibed upon us. Having a low BATNA (Best Alternative) doesn’t mean that we should continue in painful relationships by falling for sunk cost fallacy. You might have to kiss a hundred frogs before your Prince/ Princess Charming. Don’t get discouraged or settle for unhappiness, fail fast, fail often.

That brings me to the lawyer. So is this it? Is justice been served to my love life finally? Well, she just got out of a toxic relationship and wasn’t looking for anything serious. Also, my churn rate during the past ten days was 400% (4 encounters in ten days). So, even I wasn’t in any other frame of mind. That was the pretext of the date. Though, the NPV of the encounter definitely anchored it quite high; even for diminishing marginal returns. And the dopamine rush that my brain got that night was almost addictive.

Later,

Sidhant