Metric Guide

Churn Rate

Description

The churn rate is a metric that shows the percentage of customers who have stopped using your product or service within a given time period. Understanding your churn rate can help you make informed decisions about how to keep your customers engaged and interested in what you have to offer.

Calculation

To calculate your churn rate, you will need to know how many customers you had at the beginning of the time period and how many customers were retained by the end of the same time period. For example, if you had 100 customers at the start of October and 90 customers at the end of October, then your churn rate would be 10%. The higher your churn rate, the more likely it is that people are not sticking around for long enough periods to fully experience all that you have to offer.

$$1-\frac{Customers\:at\:End\:of\:Period-New\:Customers}{Customers\:at\:Start\:of\:Period}$$
Importance

High churn rates can indicate several issues with customer engagement, including lack of awareness about new products or services, difficulty with understanding what benefits a product or service provides, or dissatisfaction with pricing or customer service. By understanding why people are leaving your business in such high numbers, you can make informed decisions about how best to address those issues and retain more customers in the future.

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