Churn Rate

The rate at which customers stop using your service

Churn rate is typically used in reference to the percentage of customers that stop using your service or stop engaging with business within a given time frame. Churn rate is also often referred to as attrition rate. Churn rate can measure all kinds of churn though; employee, customer, gross revenue, net revenue etc.

Let’s look at an example of customer churn rate:

  • If a company has 100,000 customers at the start of a year and 80,000 at the end of the year,
  • you would divide 20,000 (the amount of customer that “churned”) by 100,000 (the amount of customers the company had initially)
  • to determine the customer churn rate to be 20% year over year.

There are different types of churn:

  1. Voluntary churn: A customer has voluntarily chosen to churn.
  2. Involuntary churn: A customer hasn’t voluntarily chosen to churn, but maybe a card was declined or a payment wasn’t processed correctly.

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