What is Customer Churn Rate?

Customer churn rate, also known as customer turnover or customer attrition rate, is a measure of the percentage of customers that stop doing business with a company over a given period of time. It is calculated by dividing the number of customers that churn during a given period by the total number of customers at the beginning of that period and expressing the result as a percentage.


High customer churn rates can be a sign of problems with a company's products or services, its pricing, or its customer experience. It can also be a sign of increased competition or changing market conditions. Conversely, low customer churn rates may indicate that a company is effectively retaining its customers and that its products or services are meeting their needs.


Customer churn rate is an important metric for companies to include in the business case, as it can have a significant impact on a company's revenue and profitability. High churn rates can lead to a decline in revenue, as the company loses a significant portion of its customer base, and may also increase the cost of customer acquisition, as the company must invest more in marketing and sales efforts to replace lost customers. Many companies invest in customer retention efforts to reduce churn rates and improve their financial performance.