Churn Rate

What is the Customer Churn Rate?

Customer churn rate is the percentage of customers who stop using a company’s products or services during a specific period. It is a crucial metric for understanding customer retention and satisfaction.

Benefits of Knowing Your Churn Rate

  • Improves Customer Retention: Identifying why customers leave helps improve retention strategies. 
  • Predicts Revenue Trends: Churn rate can indicate future revenue loss. 
  • Informs Product Improvements: Feedback from churning customers can guide product enhancements.

Churn Rate Formula

Churn Rate=(Number of Customers at the Start of Period/Number of Customers Lost During Period )×100


Churn Rate vs. Growth Rate

  • Churn Rate: Measures the percentage of customers lost. 
  • Growth Rate: Measures the percentage increase in customers. 

What to Do After Calculating Churn Rate

  1. Analyze Trends: Look for patterns or spikes in churn rates. 
  2. Collect Feedback: Survey churning customers to understand reasons for leaving. 
  3. Implement Changes: Address issues and improve customer experience. 
  4. Monitor Impact: Track changes in churn rate after implementing new strategies.

How Do You Calculate Customer Churn Rate?

To calculate customer churn rate: 

  1. Determine the number of customers at the beginning of a period. 
  2. Count the number of customers lost during that period. 
  3. Apply the churn rate formula.


  • Why is churn rate important?
    Churn rate helps businesses understand customer retention and the effectiveness of their strategies to maintain their customer base.
  • What is the meaning of churn in business?
    Churn refers to the loss of customers over a specific period.
  • What is a good churn rate?
    A good churn rate varies by industry but generally, lower is better. For SaaS companies, a churn rate below 5% annually is considered good.
  • What does a high churn rate mean?
    A high churn rate indicates that a significant percentage of customers are leaving, which could signal dissatisfaction or better alternatives in the market.
  • What is revenue churn rate?
    Revenue churn rate measures the percentage of revenue lost due to customers leaving, downgraded subscriptions, or other factors affecting income.
  • Customer churn rate vs. revenue churn rate:
    • Customer Churn Rate: Focuses on the number of customers lost.
    • Revenue Churn Rate: Focuses on the amount of revenue lost due to customer churn.
  • How to track churn rate? 
    Use customer relationship management (CRM) tools and analytics software to monitor and analyze churn data regularly.


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