Glossary / Churn Rate
Churn rate refers to the rate at which customers or subscribers stop using a product or service over a given period of time. It is commonly used in industries such as telecommunications, software as a service (SaaS), and subscription-based businesses to measure customer retention and loyalty. Churn rate is typically expressed as a percentage and can be calculated by dividing the number of customers lost during a specific time period by the total number of customers at the beginning of that period. For example, if a company had 100 customers at the start of the month and lost 10 customers during that month, the churn rate would be 10%. A high churn rate indicates that a significant number of customers are leaving the business, which can be detrimental to its growth and profitability. It is important for companies to monitor and analyze churn rate to identify the reasons behind customer attrition and take appropriate measures to improve customer satisfaction and retention. Reducing churn rate can be achieved through various strategies, such as improving customer service, enhancing product features, offering incentives or discounts, and implementing customer loyalty programs. By focusing on reducing churn rate, businesses can increase customer lifetime value and improve overall profitability.