Churn Rate

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 for which you want to calculate the churn rate (e.g. a month, a quarter, a year).

$ChurnRate={\frac {TotalNumberofCustomersLost(\Delta t)}{TotalNumberofCustomersattheBeginningofPeriod}}\times \ 100$

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

• Revenue Churn
• Customer Lifetime Value (CLV)

Sources

• How to calculate churn rates across industries (towardsdatascience.com)
• Calculating Churn in a SaaS Business (saasoptics.com)