Customer Churn Rate is a metric used to track the number of customers that are lost during a specific period of time. It is calculated as a percentage of overall customers and shows how many customers stop using your product or service, or cancel their subscription.
Churn rate is the opposite of customer retention rate, meaning that it is 1 – CRR. If you have a 97% customer retention rate, you also have a 3% customer churn rate.
Free Online Churn Rate Calculator
Customer churn rate tracks how many customers were lost per period. It calculates the percentage of customers that you lose during the specified period, which usually applies to ongoing subscription models.
For example, a SaaS business may have 100 subscribers at the beginning of the month. They acquire 10 new customers throughout the month. At the end of the month, their total subscriber base is 105. This means that although they gained 10 new customers, they also lost 5 subscribers. 5 divided by 100 gives a churn rate of 5%.
By knowing your churn rate, you are able to track how well you are satisfying customers over times. Once a SaaS company knows their churn rate is 5%, they can work towards reducing it. The ultimate goal is to get to a 0% churn rate, meaning that you don’t lose any customers.
Use our simple calculator to to determine your churn rate. Churn rate can use customer or subscriber counts, or actual revenue, depending on how you would like to calculate it.
Customer Life Expectancy
You can also use your churn rate to calculate your customer life expectancy. The customer life expectancy is the average period of time that a customer will to stay with your company. The average customer life expectancy is inversely related to the churn rate.
For example, the SaaS company from before has a churn rate of 5%. The customer lifetime expectancy is then calculated by dividing 1 by 0.05. They can then estimate that their average customer lifespan is 20 years.
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