Churn Rate
What is it?
Caena
Last Update 4 years ago
The churn rate, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. It is most commonly seen to be used in the subscription-based businesses where subscriptions comprise the majority of revenues. It is most commonly expressed as the percentage of service subscribers who discontinue their subscriptions within a given time period. It is also the rate at which employees leave their jobs within a certain period.
For a company to expand its clientele, its growth rate (measured by the number of new customers) must exceed its churn rate. Ideally all businesses would want to have a churn rate that is closest to zero but in reality that is impossible. For comparison's sake, Netflix which depends on its subscriptions for revenue reported a churn rate of around 3% in July 2020.