Sales Dictionary
Churn Rate
Definition
The percentage of customers who stop doing business with a company over a specific period.
Deep Dive
Churn Rate, often referred to as customer attrition rate, is a critical business metric that measures the percentage of customers or subscribers who stop doing business with a company over a specific period. It can be calculated for various entities, including subscriptions, service contracts, or even product users, providing a clear indicator of customer loyalty and retention efforts. A high churn rate signals a significant challenge to a company's sustained growth and profitability.
Examples & Use Cases
- 1A SaaS company reporting a 5% monthly churn rate, meaning 5% of its subscribers canceled their plans
- 2A mobile phone carrier seeing 2% of its customer base discontinue their service each quarter
- 3An online streaming service observing 10% of its free trial users not converting to paid subscriptions over a six-month period.
Related Terms
Customer RetentionLifetime Value (LTV)Customer SatisfactionNet Promoter Score (NPS)