How do you calculate churn rate?
Churn rate is a metric that measures the percentage of customers or subscribers who discontinue their relationship with a product or service over a specific period of time.
To calculate churn rate, follow these steps:
Determine the Number of Customers at the Start of the Period: Identify the total number of customers or subscribers at the beginning of the period you want to measure.
Determine the Number of Customers Lost during the Period: Count the number of customers who discontinued their subscription or ended their relationship with the product or service during the same period.
Apply the Formula: Divide the Number of Customers Lost during the Period by the Number of Customers at the Start of the Period. Multiply the result by 100 to express it as a percentage.
The formula for calculating churn rate is as follows:
Churn Rate = (Number of Customers Lost / Number of Customers at the Start of the Period) * 100
For example, if you had 1,000 customers at the start of the month and lost 50 customers during that month, the calculation would be:
Churn Rate = (50 / 1,000) * 100 = 5%
Therefore, the churn rate for that month would be 5%.
Churn rate is an important metric for understanding customer attrition and the health of your customer base. It helps businesses assess customer retention efforts, identify potential issues, and make informed decisions about strategies to reduce churn and improve customer loyalty.
