Churn rate
Churn rate is the proportion of customers, or of revenue, lost over a period, measured against the total at the start of that period.
Also called customer churn, revenue churn.
Customer churn and revenue churn answer different questions. Losing many small accounts and losing one large one produce very different numbers, and a business should track both.
In usage-based models churn is harder to date. A customer who stops consuming has effectively left long before any contract ends, which is why consumption decline is the earlier signal.
Common questions
- How do you calculate churn rate?
Divide the number of customers lost during a period by the number at the start of that period, then express it as a percentage. Revenue churn uses the same formula with revenue amounts in place of customer counts.
- What is the difference between customer churn and revenue churn?
Customer churn counts accounts lost regardless of size. Revenue churn weights each loss by its value. Losing many small accounts and losing one large one can produce the same customer churn and very different revenue churn.