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Customer Churn Rate

What Is Customer Churn Rate?

Customer Churn Rate refers to the percentage of customers who discontinue using a product or service during a given time frame. It serves as a key measure of customer retention and helps businesses understand whether their strategies are effective in maintaining long-term relationships.

How to Calculate Customer Churn Rate

  • Step 1: Select the time period for analysis (for example, monthly, quarterly, or yearly).
  • Step 2: Record the number of customers at the beginning of that period.
  • Step 3: Count the number of customers who left or canceled during that period.
  • Step 4: Divide the number of lost customers by the starting customer base.

Formula for Customer Churn Rate

Customer Churn Rate = (Number of Customers Lost ÷ Number of Customers at Start) × 100

Benchmark

For many SaaS and subscription-based companies, keeping monthly churn below 5 percent is often viewed as healthy. Early-stage startups may see higher churn, while mature businesses aim to maintain a consistently low rate for sustainable growth.

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FAQ's

Yes. Some churn is unavoidable, but consistently high churn is a warning sign that needs action.

Poor onboarding, lack of engagement, weak customer support, or better competitor offerings are common drivers.

Strategies include improving product usability, offering personalized support, building loyalty programs, and staying proactive with customer communication.