The churn rate or the rate of attrition or customer churn is the rate at which customers stop buying from a business. This churn rate dramatically depends on the competitive edge a company dictates. Typically, new companies experience a more substantial churn rate than a business which is mature.
The formula to calculate churn rate is as follows:
Churn Rate: (Customers at the beginning of the period - Customers at the end of the period)/ Number of customers at the beginning period x 100
For example, let us say a business began the year with 5,000 customers and ended the year with 4,500 customers.
Churn Rate: (5,000 - 4,500)/5000 X100
Churn Rate: 10%
Hence, this indicates that 10% of the customers have stopped buying from the company.