Within systems, components are constantly wearing out and getting used up. This includes both the material and information (the stocks) within a system and the parts of the system itself. Keeping a system functioning requires ongoing replenishing of both the stocks and the parts used to maintain them. We call this process of attrition “churn.”
There are examples of churn everywhere. The skin cells on your body are constantly being replaced. Trees in a forest die, and new ones grow. The parts in a car deteriorate with time; some need replacing, and some render the car unfixable once they break. People move in and out of cities. System components are never static, and understanding how and why the stocks change or the parts wear out is important. The churn model is a lens through which you can look at that kind of system change and learn how to work with it.
In business, churn refers to losing a customer, whether that’s because they canceled a subscription, stopped buying a product, moved away from a store, or something else. No business can retain every customer forever. However, the rate of churn varies depending on factors like the availability of alternatives, ease of switching, and overall satisfaction. Often given as a percentage, churn is a good metric for whether a product fits its market.
Growth may be good in business, but churn is also important to consider. It doesn’t matter how many new customers a company gets through the door if they don’t stick around long enough to earn back their cost of acquisition. If churn is high, a company may run out of money to acquire new customers.
Churn can also refer to the turnover of employees, something that varies between industries because of the varying costs for both employees and employers. If hiring and training new employees is costly, a company has an incentive to keep churn low, and vice versa. Fast-food restaurants, for instance, have a higher churn rate than governments. A certain level of churn, even just from people retiring, helps bring in new perspectives and experiences. Too much churn prevents expertise from accumulating.
When churn is too high in a system, replacing what is lost or used up becomes a process of running to stay in the same place. Once we get stuck in the trap of keeping up with churn, it’s time to step back and reassess if it’s worthwhile or if there’s another way.
Since churn of some sort is inevitable in all systems, it’s useful to ask how we can use it to our benefit. Is it worth going through contortions to keep every customer, or should we let a certain percentage go and focus on the core customers who keep our business going? Is it worth trying to retain employees who have lost interest in the job or who would experience more professional growth elsewhere? Understanding your situation through the lens of churn can help you figure out how to harness the dynamics that drive it.
We can never eliminate churn in groups of people. When the purpose of an organization becomes preventing members from leaving, it turns into a cult. A cult is a group doing everything possible to control its members. Avoiding churn becomes the whole purpose, as opposed to whatever the initial aim was. Every detail is intended to entrap members tighter. Even if the initial purpose was positive, this process can only ever end up harming members.
“Today is the first day of the rest of your life.” You might have heard these words as a motivational quote, but their origins are somewhat more sinister. Charles Dederich*, founder of the cult Synanon, is the originator of this quote. Synanon is one of the most notable cults in US history for several reasons. Its success in attracting members lent it a place in popular culture, earning mentions in well-known songs and books between the 1950s and 1990s. It gained support from political figures like Senator Thomas J. Dodd and Nancy Reagan*. Synanon was also practically unrivaled in the intensity of its efforts to prevent members from leaving or the outside world from impeding its activities. It was an efficient churn-minimizing machine. Though the organization began with positive intentions, the goal of holding on to members became all-encompassing.
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When we have a customer retention rate of 90%, we may think we’re doing great. But over time, the 5% difference between us and our competitor means we have less growth and have to work a lot harder to keep up.
Synanon began in 1958 as a drug addiction rehabilitation program. Dederich, a former alcoholic, started the group in his small flat, using a $33 (about $300 today) unemployment check.1 By its demise in 1991, Synanon had progressed to an incomprehensible level considering its inauspicious origins; it had morphed into a full-blown cult with thousands of indoctrinated members.2
When Dederich founded Synanon, treatment options for people with addictions were limited in the United States. Having dropped out of university and failing to hold down a job or make relationships work due to his own out-of-control drinking, he knew the cost of uncontrolled addiction for individuals and their families. Although Alcoholics Anonymous existed at the time, rehabilitation facilities were not widespread, and the belief that addiction is a personal failure was prevalent. Based on his own experiences, Dederich initially believed addiction was curable, provided an individual changed their social context and helped others.3 Although we now know that environment and relationships do play a significant role in addiction, his belief ended up justifying control at the expense of treatment.
A decade after Synanon’s founding, Dederich changed his mind about the nature of drug addiction. He decided it was impossible for people with addictions to ever make a full recovery and go on to live regular lives. Synanon members were now expected to stay in the group. Forever.
Dederich began using brainwashing techniques to eliminate churn while using the threat of force to deter potential defectors. To grow Synanon further, he started accepting new types of members, including middle-class people in search of personal growth and young people sent to him by court order—showing that the organization had mainstream approval at the time.
Synanon’s control over members to prevent them from churning was total, using a combination of brainwashing, denial of autonomy, and threats of violence. Synanon members shaved their heads, wore overalls, and quit smoking and drugs cold turkey. As they went about their day in dedicated Synanon buildings, they listened to Dederich repeating his views over radio stations for hours on end. Married couples who joined together had to divorce. Members were not permitted to have children.
Perhaps the most extreme mind-control technique was “The Game.” During lengthy sessions, members were encouraged to criticize each other and air grievances with anyone in the group. In theory, the purpose was to ensure no secrets were held and no hierarchies emerged. In reality, it served to break members down emotionally before rebuilding them with support from others.4 The Game is best viewed as a deliberate form of traumatic bonding in which cycles of abuse appear to strengthen relationships. Synanon also had a paramilitary group equipped with hundreds of guns and capable of attacking anyone who opposed Dederich or left. A lawyer who sued Synanon found a live rattlesnake in his mailbox, its rattle removed.
When Synanon came under legal scrutiny for operating without medical licensing, Dederich declared it was no longer an addiction treatment program and was now a religion. Once again this move allowed more control over members. A rehabilitation or personal development program has an end point. A religion does not. Dederich had a stronger justification for preventing the churn of members.
Synanon met its end when the IRS revoked its tax-exempt status and ordered it to pay millions in back taxes.5 Its story teaches us that churn is inevitable within any system and seeking to eliminate it perverts the goals of a system. Regardless of initial intentions, a group that tries to stop anyone from leaving can only end up violent and coercive. People being able to leave as they wish places checks on abuses of power. The same is true for countries or companies. People need the freedom to vote with their feet if things get too bad. In this sense, lack of churn can be a powerful indicator that something is not right.