Marketing Dictionary
Churn Rate
Definition
The annual percentage rate at which customers stop subscribing to a service or employees leave a job.
Deep Dive
Churn rate, often referred to as customer attrition rate, is a critical metric for businesses with recurring revenue models, such as subscription services (SaaS), telecom providers, or gyms. It measures the percentage of customers who stop subscribing to a service or employees who leave a job over a specific period. A high churn rate indicates dissatisfaction, competitive pressures, or a poor product-market fit, directly impacting a company's ability to grow and maintain profitability.
Examples & Use Cases
- 1A streaming service sees 5% of its subscribers cancel their memberships in a quarter.
- 2A SaaS company tracks that 10 employees left their roles over the last fiscal year, out of a total workforce of 100.
- 3A mobile phone carrier experiences 2% of its customer base switching to a competitor each month.
Related Terms
Customer Lifetime Value (CLV)Retention RateAttrition