Churnrate

Churn rate is the rate at which customers stop using a product or service over a given period. It is a common metric in subscription-based and service-oriented businesses, used to assess customer retention and the health of a revenue stream.

The most common calculation defines churn rate as the number of customers lost during the period divided by the number of customers at the start of the period. Some analysts use the average number of customers during the period to reduce distortion. Churn can be reported on a monthly, quarterly, or yearly basis, depending on business cycles and data availability.

There are several variants of churn. Customer churn counts individuals who cancel, do not renew, or downgrade beyond a defined threshold. Revenue churn measures lost revenue as a percentage of starting revenue, and can be influenced by the size of the accounts lost or by contraction in existing customers. Retention rate is related and can be viewed as the complement of churn, though precise interpretation depends on the chosen counting window and cohort definition.

Measurement and analysis considerations include seasonality, contract terms, and the definition of active customers. Cohort analysis helps reveal how churn evolves for groups defined by start time, plan, or other attributes, while survival analysis can model time-to-churn for individual customers. Data quality and consistent counting are important for reliable estimates.

Uses and management: churn is a key input for forecasting revenue and customer lifetime value. Businesses monitor churn to guide customer success, product improvements, pricing, and re-engagement efforts. Strategies to reduce churn include improving onboarding, enhancing product-market fit, proactive support, and targeted win-back or reactivation campaigns.