Big churn rate is bad sign for businesses - and politicians: Bird Lovegod

Another churn is customers, especially true for businesses where they are trying to build and maintain communities or subscribers. It costs money to find a customer, and the customer acquisition cost can be many multiples of customer revenue.

Churning customers is a sure sign the product doesn’t fit properly, they’re being mis-sold, or they are being subsidised and leave when the subsidy ends.

I once worked for a door to door charity fundraising enterprise. They had an employee churn rate that was off the scale.

They had an entire team whose job was to hang around outside job centres and student unions and get the names and phone numbers of potential recruits, whereby another cog in the recruitment wheel of misfortune would call them, sell them on the job opportunity, and close an interview whereby they would come in for two half days to be sifted like grain from chaff.

Successful applicants were those who completed both days, after which they were put to work on the streets, knocking doors and trying to convince householders to contribute £10 or more a month in support of whatever charity they had been assigned to.

It had to be one of the hardest jobs in modern society. Walking in all weather, knocking on 100 doors, having a 20 minute break to eat whereby you sat at a bus stop and had a sandwich, then back on the doors until 9 at night

Unsurprisingly the churn was over 90 per cent per month. For every ten new employees, at least nine would be gone within four weeks. Either leaving because it was terrible, or being sacked for failing to hit mandatory sales targets. It was a machine, a hugely inefficient one, vast amounts of paperwork for recruitment and onboarding and paying wages for a few days and all for nothing in 90 per cent of cases.

Another horrible churn is when customers leave as fast as they come in. Or faster. And this will have been the fate of many of the charity signups, leaving before a year, and in doing so actually costing the charity money, for they used to pay between £140 and £200 for each new signup, irrespective of how long they signed up for.

When a business is churning sales or employees or both it’s a really bad sign, a clear indicator something is broken, certainty the company culture, and possibly the entire business model. This was the case with the door to door fundraising company, they went into administration and 600 people lost their jobs. The only surprising thing was how long it took.

Churn rate is one of those metrics that cannot be polished to look any less poor than it actually is.

And if churn in business is bad, churn in politics is even more horrible to witness. When a political party churns leaders and ministers, something is deeply wrong.

And when that political party is the ruling one, as we are now witnessing, it’s absolutely wrong of them to do anything other than call a General Election. The party is over, it’s broken, it’s not functioning as it should and needs to.

There’s more than 600 jobs at stake, there’s 60 million people plus future generations who are impacted by the meltdown of Number 10.

The Conservative party isn’t working. And everyone inside it and outside it knows it. Time to call in the receivers.

Bird Lovegod is MD of EthicalMuch