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Meaning & Definition

Churn Rate

It 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 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.

To calculate customer churn rate, set a time period and tally up the total number of customers you've acquired and the number of customers who churned during that time period. Then, divide the number of customers who churned by the total number of customers acquired, and multiply that decimal by 100% to calculate your churn rate.

Customer Churn Rate = (Lost Customers ÷ Acquired Customers) x 100%

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