• Vyas

What is Churn Rate or Customer Churn?

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.

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