Customer Churn Rate
Measures the percentage of customers or subscribers who stop using a company's product or service during a particular time period. High churn can indicate customer dissatisfaction, while low churn suggests that customers are happy with the product or service.
Businesses should always aim to reduce churn, increase lifetime value, and keep an eye on how much it costs to replace lost customers (Customer Acquisition Cost). If the cost to replace customers becomes higher than the value derived from them, the churn rate is becoming unsustainable.
(Number of customers lost in period / Total customers at start of period) x 100
If a business started the month with 120 customers and lost 5, the churn rate = (5 / 120) x 100 = 4.17%.