Metric: Customer Churn Rate

The Customer Churn Rate reports the rate at which your customers are canceling all their active subscriptions. This is based on your churn rate formula.

A customer would only contribute the calculation of this rate if all their subscriptions have been canceled. If a customer has multiple subscriptions and only one of them is canceled, this would be classified as a contraction rather than churn. 

The value for the current month is an estimation based on churn so far this month.

When calculating churn rate it’s important not to mix subscriptions with significantly different billing periods, such as monthly & annual plans. For younger startups, the renewal rate can be a more meaningful metric to gauge the churn of customers subscribed to annual plans.

 

What analysis can be gained?

This graph is useful if you want to see the rate at which your customers are churning over time. Understanding your customer churn is important as keeping existing customers is much cheaper than acquiring new ones. Further, maintaining a healthy revenue growth to scale becomes harder over time if your customer churn is too high. Use segmentation to see the customer churn rate for customers who gave you a negative NPS score, by plan, or by marketing channel. 

customer_churn_rate.png

Was this article helpful?