If you’re a business leader, customer churn rate is something you should keep an eye on. It’s a metric that can tell you a lot about the health of your business and how successful you are at retaining customers.

But what exactly does customer churn rate mean?

Customer churn rate is simply the percentage of customers who have stopped using your organisation’s products or services, often measured over a specific time period.

Let’s break it down in a bit more detail.

What is Customer Churn Rate?

Customer churn rate, or just “churn rate” for short, is the percentage of customers who stop using your organisation’s products or services over a certain period of time.

It’s usually expressed as a monthly rate, so if your churn rate is 5%, then 5% of your customers are leaving each month.

To calculate it, divide the number of customers who left in a given period by the total number of customers at the beginning of that period.

Why Should You Care About Your Churn Rate?

Churn rate affects more than just customer retention; it also has an effect on revenue and profits.

When customers leave, they take their money with them, which means that there’s less money coming in to offset overhead and operations costs (i.e., advertising, salaries, software and office rent).

High churn rates also mean that businesses have to constantly reinvest in acquiring new customers to replace those who have left—which can be costly over time.

Knowing your churn rate can help you identify where potential problems may lie within your business model or customer service strategy.

If you notice that your churn rate is increasing steadily over time, this could indicate that there are underlying issues that need to be addressed in order to retain more customers and reduce customer attrition.

Conclusion

To sum up, customer churn rate is an important metric for any business leader to monitor because it can provide valuable insight into things like customer satisfaction and profitability.

Knowing your churn rate will help you identify areas where improvements need to be made in order to retain more customers and generate greater revenue in the long run.

So don’t forget to keep an eye on this important key performance indicator.