Churn Rate

Churn Rate is an indicator of customer churn, it captures how many active customers (subscribers or users) became inactive during a certain time (usually from a month to a year).

That is, they stopped purchasing a product or performing other targeted actions: they canceled a paid subscription, left a channel, chat or group, unsubscribed from e-mail newsletters, etc.

Churn Rate is extremely important for a business that provides a subscription product because it is the highest rate in this area. However, the Churn Rate is significant for any industry of online and offline business, since an intense outflow of customers/users leads to a decrease in profits and affects all key company indicators.

Churn Rate is calculated by the formula:

in which C1 denotes the number of active clients at the beginning of the period, and C2 is the number of active clients at its end. CR is usually divided into three categories: natural churn (the client stopped using the product for individual reasons), motivated churn (the client chose a competitor's product or an alternative solution), hidden churn (the client began to buy the product in smaller volumes or less often than before).

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