What is Churn Rate?
Your churn rate is the amount of customers or subscribers who cut ties with your service or company during a given time period. These customers have “churned.”
Churn Rate Calculator
In the above example, you calculated churn rate as a percentage of customers lost, but there’s more than one way to calculate churn.
of customers lost
of recurring business lost
of recurring value lost
Regardless of how you choose to represent churn, tracking your churn rate is tantamount to success. It's almost always cheaper and easier to retain customers than it is to go through the process of acquiring new ones. Monitoring churn is the first step in understanding how good you are at retaining customers and identifying what actions might result in a higher retention rate.
Churn is a growth decelerator. Use the calculator below to explore the impact your churn rate today will have on your business over the next five years.
5-Year Revenue Projections
Churn Rate for Ecommerce
While Churn Rate has traditionally been used by businesses relying on recurring revenue models, many of today’s leading ecommerce companies are also adopting the metric.
Calculating churn for ecommerce is trickier, but doable, and well worth the effort. The key difference for non-subscription-based ecommerce companies is that they need to clearly define what constitutes a churn event. For example, if a company knows that most of their customers who will make a repeat purchase do so within 90 days, they may choose to mark any customer who has not made a purchase in that time period as being “churned.”
Whether you are a subscription or non-subscription-based ecommerce store, maintaining a handle on your churn rate will help ensure the long-term growth and health of your business.
For more information on churn rate, download our whitepaper.