I am often asked how long clients stay with us. I have never really understood how to answer that question because the only way to do so is to take the average of those clients who have stopped using us and that seems mad because how can I ignore a client who has been using us for 15 years?
So instead, RSW measures client churn. Here is how we do it.
At the end of each month we add up the number of clients who have stopped using us over the preceding three months. We then multiply that by four (four quarters per year) and then calculate what that number is as a percentage of the average number of clients we have worked for per month over the last twelve months.
EG – if the average number of clients we have worked on in the preceding twelve months is 24 and in the last quarter we have lost six clients (two per month) then our client churn rate is 100%.
The average churn rate for the marketing, advertising and PR industry is (I have been reliably informed by the CFO of a listed group), 25%.
In the last quarter of 2012 our client churn rate was 16%.