Besides the dynamic indicator of the number of active clients, it's very useful to know how this indicator is affected by client churn (clients who stop paying), and at what speed we get new clients or return former clients - this indicator is called inflow.

In fact, the indicator of outflow (for some types of business) tells us about the quality of our services, goods, etc. And if the outflow increases relative to the active base, it can be a signal to management decisions, for example, in the production department.

The inflow often characterizes the quality of work of sales, marketing and advertising departments. This indicator is also useful to measure in relation to the active customer base.

Very often there are difficulties with the definition of the active base of clients both analysts and programmers. It is connected by that the algorithm described in words very simply, is often difficultly realized by standard IT tools.

Active Customer Base (ABC), is calculated using the following formula:

Where P is an inflow, O is an outflow.

Where H is new customers and V is returnable. That's it:

Next, how do we identify new, returning and outgoing customers?

N is a client who paid. The date of the first payment = the date on which a new customer appears.

O - this is the number of customers who left the outflow, these customers are those who have not made payments (purchases) N days. In our example, we used N=70, which is two months and 10 days. You can use your coefficient.

C - are customers who have gone out, that is, did not buy more than 70 days, but made a purchase after that date, for example on day 85, and on that day the customer is marked as a refund.

Depending on the type of transaction (in your business), the client may become a client not necessarily after the payment is made, but for example, after the contract or order is made. And to leave in an outflow he can in other terms and for other reasons. But the essence of the report from it does not change, it can be adapted to almost any conditions.

How do I use information on outflow, inflow and active base?

1.It is very useful to compare the changes in inflow with the advertising and maintenance costs of the sales department to assess the effectiveness of these units.

2.By multiplying the active base by the average check, you get a gross profit.

3.By dividing O and P by ABC and multiplying by 100%, you will get P% and O% ratios to see the rate of change of these ratios.

4.If the outflow increases, it's a good time to find out why, as it can greatly affect the immediate performance of the company.