Churn Rate
The percentage of customers who stop doing business with you over a given period.
Formula
Churn Rate = (Customers Lost / Customers at Start) Γ 100
Example
If you started with 1,000 customers and lost 50, your monthly churn rate is 5%.
Category
Metrics & Scoring
Full Definition
Churn rate measures the percentage of customers who discontinue their relationship with your business during a specific time period. It's one of the most critical metrics for subscription businesses and any company focused on customer retention.
Calculating Churn Rate: Churn Rate = (Customers Lost During Period / Customers at Start of Period) Γ 100
Types of Churn: - Voluntary Churn: Customers actively decide to leave - Involuntary Churn: Customers leave due to payment failures, etc. - Revenue Churn: Loss of recurring revenue (can differ from customer churn)
The Connection to Customer Feedback: Churn is often the result of accumulated negative experiences. Customer feedback provides early warning signals. Declining NPS scores often precede churn.
Common Use Cases
Real-World Examples
Scenario
A gym notices 120 of its 1,000 members cancelled in January (New Year resolution failures). Monthly churn = 12%.
Outcome
Gym implements a "February Recommitment" program with personal check-ins for at-risk members. February churn drops to 6%.
Scenario
A SaaS company sees churn spike from 3% to 8% after a major product update that removed popular features.
Outcome
Product team analyzes churned customer feedback, restores key features, and offers win-back discounts. 40% of churned customers return.
Scenario
A meal kit delivery service tracks that customers who skip 2+ weeks have 70% probability of churning within 60 days.
Outcome
Automated system now sends personalized "We miss you" offers with menu highlights after 1 skipped week. Churn reduces by 18%.