Churn Rate
Churn rate is the percentage of customers or subscribers who stop using a service or product over a given period. It's a key metric for understanding customer retention and business health.
How it works
It's calculated by dividing the number of customers lost during a period by the total number at the start. A high churn rate indicates dissatisfaction or poor product-market fit, directly impacting recurring revenue and growth. Businesses actively work to reduce churn through improved service, features, and customer engagement.
Examples
- 1.A streaming service calculates that 5% of its monthly subscribers cancel their plans each quarter.
- 2.A SaaS company identifies a spike in churn after a price increase and launches a customer feedback campaign.
- 3.A mobile app developer tracks user churn to measure the success of a new feature designed to increase daily engagement.