What is Customer Churn?

Is also known as customer attrition, customer turnover, or customer defection, and is basically the loss of clients or customers, i.e. when a customer decides to stop buying a merchant’s digital goods or services, or cancels a subscription. This KPI reflects the percentage of customers that end a collaboration with a company’s services or products during a certain period of time. To calculate the churn rate, you have to divide the number of customers a company has lost during a specific time period by the number of customers the company had at the beginning of that time. The churn rate shows how fast clients are leaving your company, product, or service. Benchmark your company’s churn rate against your industry average and monitor how your churn rate changes over time. Cohort analysis is necessary here to understand which customer segments churn more and why.