Churn Rate

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Churn rate refers to the rate at which customers or subscribers discontinue using a product or service over a given period of time. It is a metric used to measure customer retention and is typically expressed as a percentage.

Definition

Determine the time period (\Delta t\) for which you want to calculate the churn rate (e.g., a month, a quarter, a year).

<math> Churn Rate = (\frac{Total Number of Customers lost \Delta t\}{Total Number of Customers at the beginning of period}) \times\ 100

Details

There are two main variations of Churn Rate:

Gross Churn Rate
  • The percentage of customers who have discontinued using a company's products or services during a particular period, regardless of the reason for the discontinuation.
Net Churn Rate
  • The rate at which a company loses revenue over a given period of time due to expansions, cancellations, and downgrades.

Standardization Status

Request for Comments (RFC): 23/0106 - Churn Rate
Type: metric
Version: 0.9
Status:proposal

See also

Sources