FormulaChurn Rate = Customers lost during period ÷ Customers at period start × 100
Churn Rate measures the share of customers, users or subscribers who end a relationship or stop being active during a defined period.
How it works
It is natural in subscription models but can also be adapted to retail by defining an inactivity threshold. The time window is part of the metric and should reflect the purchase cycle.
Practical example
A service starts the month with 10,000 subscribers and loses 300: monthly churn is 3%, before any other adjustments.
Why it matters
Reducing churn can materially increase customer value by extending the relationship and improving the efficiency of the initial acquisition investment.
What to watch
An average churn rate can hide very different segments. It is often more useful to analyze it by cohort, product, customer tenure and reason for leaving.