Customer Churn Formula:
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Customer Churn Rate is a business metric that calculates the percentage of customers who stopped using your company's product or service during a certain time frame. It's a key indicator of customer retention and business health.
The calculator uses the Customer Churn formula:
Where:
Explanation: The formula measures what percentage of your total customer base you've lost during a specific time period.
Details: Tracking churn rate helps businesses understand customer satisfaction, predict revenue changes, and evaluate the effectiveness of retention strategies. Lower churn rates typically indicate better customer retention and business health.
Tips: Enter the number of customers lost (churned) and the total number of customers at the start of the period. Both values must be positive numbers, and churned customers cannot exceed total customers.
Q1: What's a good churn rate?
A: It varies by industry, but generally under 5-7% annually is good for SaaS businesses, while e-commerce might aim for under 10% monthly.
Q2: How often should I calculate churn rate?
A: Most businesses calculate it monthly, but high-growth startups might track it weekly.
Q3: What's the difference between customer churn and revenue churn?
A: Customer churn counts lost customers, while revenue churn measures lost revenue (which might differ if customers pay different amounts).
Q4: Should I include new customers in the total?
A: No, use the customer count at the start of the period for accurate calculation.
Q5: How can I reduce my churn rate?
A: Improve customer service, offer better onboarding, regularly engage customers, and address pain points in your product/service.