Have you ever stopped to think about the number of customers you lose every year… or every month? Churn Rate refers to the number of customers you are losing in a given period of time, and it is a metric that can be scary to calculate if you haven’t done it before, but it is necessary to do so because looking the other way does not solve the problems.
It is not easy to know how to calculate the Churn Rate optimally , so in this article we want to help you know how to calculate and interpret it.
What is the churn rate?
As we mentioned before, churn rate could be country email list defined as the percentage of customers or subscribers who cancel or do not renew your service during a certain period of time, such as a month or a year.
This metric is vitally important for companies review b whose customers pay for the service on a recurring basis, whether quarterly, monthly or annually. For example, any SAAS or subscription-based service should closely measure its churn rate .
Its importance is because, regardless of the revenue you have from your subscription service, if the customer does not stay long enough to recover the average acquisition cost (CAC) , then you are in serious trouble.
How to calculate the churn rate of your business?
To calculate your customer churn rate , you don’t need to be a great mathematician. To do so, you must follow these steps:
- Determine a time period : monthly, yearly, or quarterly.
- Determine the number of customers create buyer personas you had at the beginning of the time period.
- Determines the number of customers who churned at the end of the time period.
- Divide the number of customers lost by the number of customers you had before churn.
- Multiply that number by 100.
Churn Rate Formula
(Lost customers / Total customers at the beginning of the period) x 100
For example, if your company had 500 customers at the beginning of the year, and lost 100 at the end:
(100 / 500) x 100 = 20%
Remember that:
Lost Customers : Customers who have abandoned their subscription, or terminated and not renewed during the given period.
Total Clients : Clients you had at the beginning of the selected period
Churn rate examples from large companies
Some well-known companies, usually B2C-focused SAAS, publish their churn rate. While their intention is to show how well they do in retaining their customers, these rates can be used to evaluate our own rate and compare it with that of large companies.
