The Difference Between Customer Churn and Bounce

The Difference between Customer Churn and Bounce

Many of us have heard the terms “churn” and “bounce”, and probably understand that both are bad.  But what’s the difference? These two distinct terms are often confused due to the similarities they share. You can't really blame those who choose to accept that these two terms are synonymous with each other. In this post, we take a take a look at each definition, and how each affects your business - be it a brick and mortar, online retail, software, or any other - and how we can mitigate both through natural langue processing (NLP).

As a business owner who is accustomed to business terminology, you might have heard of the term customer churn, or would have certainly, at some point, experienced customer churn. Customer churn, which is also known as customer attrition, customer defection, or customer turnover, is the loss of clients or customers. Sounds familiar, right? I bet it does. As business proprietors, we tend to experience customer churn frequently and for diverse reasons.

Many institutions like banks, internet service providers, telephone service companies, etc, analyze customer churn and customer churn rates because it costs more to acquire a new client than to retain them. We should all measure churn, as the loss of future revenue, not to mention the sunk acquisition cost, is significant.  To rub salt into the wound, oftentimes customers who churn end up doing business with one of your competitors. Sometimes the grass really is greener - if only we knew why.

Now let’s take a brief look at customer bounce so we can effectively differentiate these two terms. You may be quite familiar with bounce rate, which is an internet marketing term adopted in web traffic analysis, and can be defined as the number or percentage of visitors who access a site and then "bounce".

Customer bounce, as applied to any business, is basically the same thing. A customer participates in a trial, visits your location, or otherwise demonstrates interest in patronizing your business but, for whatever reason, decides against it. In other words, customer bounce can be described as a person evaluating your product and deciding not to purchase it.

So while in a broad sense, both customer churn and bounce represent the absence of revenue (usually) and corresponding opportunity cost, the circumstances and reasons surrounding each decision are vastly different. Since customer bounce involves potential customers who were most likely drawn to your brand through a marketing campaign, it becomes important to focus on why there was a disconnect between what they expected to find and actually found. Reasons can vary - price, packaging, availability, or the product itself can all take some of the blame.

If your business handles inbound leads (phone calls, chats, etc), oftentimes customers share the reason for the bounce right in the moment.

We are all familiar with comments such as “oh, that’s a bit too expensive”, or “I really needed it today” in our daily commerce activities.  These are the reasons customers bounce. Straight from the horse’s mouth.

While clearly a different problem than customer bounce, customer churn also shares one thing in common with it: customers who freely share their thought processes and opinions. When a customer reaches out to a business to express confusion or displeasure, they offer clear insight into what lies ahead from a customer retention standpoint.

The SupporTrends Customer Insights platform gathers feedback that your customers are sharing already, and surfaces key phrases, questions, and statements used by them at each stage of the buyer experience, including bounce and churn. By cross-referencing those comments against sentiment and estimated Net Promoter Score, we can help your business go beyond mere awareness of lost customers and show you why it’s happening, no surveys required.

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