Churn Rate refers to the proportion of users that terminate their account in a set period. Alternatively, churn rate can be calculated as a proportion of revenue churn to monthly revenue.
Why use it
User Churn Rate can give insight about the average Customer Lifetime. A low User Churn Rate can also be an indicator of high customer satisfaction.
Alternatively, Revenue Churn Rate (the ratio of churned revenue to monthly revenue in percent) can be calculated. It gives insight about proportionally lost revenue volume.
Churn Rate can be calculated by dividing the sum of users leaving a company by the total sum of users in a month.
|∑ users leaving|
|÷ ∑ of users|
|User Churn Rate|
A company wants to caculate their Churn Rate. In January they had 1.500 users and 50 left.