What is Churn Rate?

A measure of customer retention

Churn Rate is the rate at which customers leave your business. If you have 100 customers at the beginning of a year, and a year later you only have fifty of those customers left, then 50% of your customers have churned away that year.

Churn rate can be calculated over any period but is usually discussed annually. A monthly churn rate can be multiplied by twelve to get an annual rate. Similarly, a churn rate over a day can be multiplied by 365. However, as with any statistic, the longer the period and the more data you have, generally the more accurate the data.

Churn rate can also vary between client segments or between products or sign up source.

At Upmind, we contrast your long-term annual churn rate with short-term churn rates to help you spot any issues or anomalies.

What does Churn Rate help with?

Churn rate helps you establish customer life time revenue and life time value. (LTR/LTV). These are crucial metrics at working out how much value each individual customer brings to your business.

Churn rate also helps you spot problems in your business. If your churn rate increases then you can look for the reasons why that might be the case.