What is Churn Rate?

Churn rate measures how many customers stop using a company's product or service over a certain time. It's a crucial number, especially for businesses that sell subscriptions. To figure out churn rate, count how many customers you lost in a time period. Then divide that by the total number of customers at the start. Multiply by 100 to get a percentage. For example, if you start with 1000 customers and lose 50 in a month, your monthly churn rate is 5%.

A high churn rate can mean problems with product quality, customer service, or overall value to customers. It's often cheaper to keep current customers than to get new ones. So, reducing churn is usually very important. Ways to reduce churn include improving how you teach new customers to use your product, providing great customer support, and regularly adding value through updates or new services.

Many companies look at churn rate for different types of customers. This can show which groups are most likely to leave. While some churn is normal, keeping it low is key to growing your business. A low churn rate means more stable income and customers who stay longer and spend more.