Customer Churn Rate Calculator
Answers the Question
How often do customers quit?
Calculator for Customer Churn Rate
What Is the Customer Churn Rate?
Customer churn measures the change in a firm's customer base over a period of time (often months, quarters, or years).
A simple count of how many customers have quit is often insufficient for decision-making purposes. That is because it can be difficult to understand its meaning as a company grows or compare it against the values from other firms. For this reason, it is usually expressed as a faction of the customers who have quit.
Although many will record customer churn as a statement of what has already happened, astute managers will often attempt to estimate the churn that their firms are likely to experience in the future. The better they are able to predict, the better they able to attempt to improve their situations.
Why Is it Important?
- The higher the churn rate, the greater the number of resources that must be devoted to obtain new replacement customers.
- Sudden changes to the churn rate may indicate significant shifts in customer perception. Increasing churn may indicate problems, just as decreasing churn may indicate successes.
Formula(s) to Calculate Customer Churn Rate
- CUSTOMER CHURN = NUMBER OF CUSTOMERS WHO QUIT / NUMBER OF CUSTOMERS AT START OF PERIOD * 100
- Only looking at the difference in customer count. A large increase in customers can hide an equally large rate of churn.
- Assuming that customer churn is an immediate indicator. In cases when customers have agreed to lengthy contracts or have high switching costs, the visible effects of customer decisions may become visible weeks, months, or even years after a decision has been made.
- Assuming that a customer churn rate in one industry is necessarily acceptable in every other. Each industry and customer base will have different norms.