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Having the GGA Audience Development Intern with us this year was invaluable. Susie’s focus on family audiences pushed this area of our work up the agenda at the right time when we had new opportunities in our programming to exploit and made it an active part of our strategic and tactical planning for the year. It allowed us to achieve results in an important area of our development as a company and I firmly believe these would not have been achieved otherwise.

Alison Martin, Marketing & Communications Manager, Citizens' Theatre Glasgow

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Churn

What does this mean?

An analytical procedure for quantifying the degree of audience turnover, based on evaluating and comparing the rate at which new audience members are acquired, and existing audience members are retained or lost.

The term ‘churn’ is also used as a name for the identified rate of audience turnover.

How did we get this definition?

The measurement of the turnover (or ‘churn’) of a customer or audience base is a technique that was first developed and used in the mobile phone, cable television and publishing sectors. As such it enables both the relative loyalty of a group of customers to be quantified, and the rate at which that customer base is being refreshed or denuded.

The technique is founded on the notion that any audience or group of customers can be thought of as being like a ‘leaky bucket’. So the prevailing level of active customers depends on assessing: how many customers are being kept; how many new customers are being gained; and how many existing customers are being lost.

[Diagram representing the leaky bucket analogy]

Related and similar definitions

A ‘churn analysis’ works rather like the audience equivalent of thecashflows used in financial management.

To build one, three basic statistics are required, namely:

  • The number of customers and users there were at the start of the period being analysed
  • The number of new people acquired as customers and users by the organisation during that period
  • The number of customers and users lost during the period in question.

With this data to hand, the churn calculation is performed as follows.

  1. Record the number of customers there were at the start of the period being analysed (this will be called A)
  2. Find the number of new customers gained during that period (B)
  3. Identify the number of customers lost during the same period (C)
  4. The number of customers being carried forward to the next period (D) can now be calculated as: A + B - C
  5. As can the number of customers retained during the period (E) (and thus included in the number carried forward) – this equals A - C
  6. The net change (F) in the size of the audience can be found through the calculation B - C (an alternative way of finding this is to work out: D - A).

Two other calculations using these figures can also usefully be carried out to give an indication of the relative rate of this audience’s turnover.

The percentage churn equals:

Net change ÷ starting number × 100 = E ÷ A × 100

When carried out on a regular basis (say every season, or every year) these calculations can be a useful way of monitoring what has been happening to an audience. But please remember that – as yet – there are no national standards for what represents a ‘good’ or a ‘bad’ rate of churn.

Equally interpretation of the resulting statistics will depend on your organisation’s aspirations and intentions. Hence, if one of your main aims is to attract new audience members, a high or big rate of churn might be good news. But if your core aim is to retain audience members, a low rate of churn and a high rate of retention would constitute good news.

Worked example

Say an organisation decides to start its churn analysis by examining the year 1998–99. So this will be the initial period to be considered.

It finds that:

  • at the start of this period there were 10,114 customers
  • during that same period 246 new customers were attracted and
  • at the same time 378 customers were lost.

Thus applying the calculation described above gives the following table.

Aspect Period
1998/99
Customers at start (A) 10,114
Customers added (B) 246
Customers lost (C) -378
Customers at end c/f (D) 9,982
Retained included in c/f (E) 9,736
Net change -132
% churn -1.31%
% retained 96.26%

The same organisation decides to repeat the calculation for the next year (i.e. 1999 - 2000).

Here:

  • the number of people brought forward from the previous period equals 9.982
  • the number of customers acquired during the year equals 357 and
  • the number of people lost during the year equals 123.

This gives the following expansion of the previously created table.

Aspect Period
1998/99 1999/00
Customers at start (A) 10,114 9,982
Customers added (B) 246 357
Customers lost (C) -378 -123
Customers at end c/f (D) 9,982 10,216
Retained included in c/f (E) 9,736 9,859
Net change -132 234
% churn -1.31% 2.34%
% retained 96.26% 98.77%

From this new version of the table it can be seen that:

  • overall the audience has grown
  • as has the number of people retained
  • there is now a faster rate of churn than in the first year, and this is now positive (here note that the larger the number for percentage churn, the faster that rate is, and that a positive number indicates that the audiences is growing while a negative figure indicates that it is shrinking) and
  • there is now a stronger retained percentage (i.e. it has increased from one year to the next).
When to use

This technique can usefully be employed when a quantitative measure of the organisation's performance in terms of audience growth, retention and turnover is required.