Churn rate
Customer churn and revenue churn answer different questions, so the unit must be explicit. A common customer-churn formula is customers lost during the period divided by customers at the start. Teams should separate voluntary and involuntary churn, analyze affected cohorts and segments, and avoid mixing new customers into the denominator. Churn is closely linked to retention and lifetime value.
What is Churn rate?
Churn rate is the percentage of customers, users, subscriptions, or recurring revenue lost during a defined period.
Why it matters
Customer churn and revenue churn answer different questions, so the unit must be explicit. A common customer-churn formula is customers lost during the period divided by customers at the start. Teams should separate voluntary and involuntary churn, analyze affected cohorts and segments, and avoid mixing new customers into the denominator. Churn is closely linked to retention and lifetime value.
Example
A service starts the month with 1,000 paying customers and loses 40 of them, producing a monthly customer churn rate of 4%.