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Churn Rate Definition
Churn rate, or customer attrition rate, measures how many customers a business loses over a set period compared to its total customer base. It's a key performance indicator for retention, growth, and customer satisfaction across industries like SaaS, telecom, and subscription services.
How Churn Rate Works
- Track the number of customers lost during a period.
- Divide by the total number of customers at the beginning of the period.
- Analyze reasons for churn, such as price, service quality, or competition.
- Implement retention strategies to reduce churn over time.
Example of Churn Rate
A streaming service sees a 10% monthly churn rate, prompting it to offer personalized recommendations to retain subscribers.
Why Churn Rate Matters in Advertising
- Directly impacts revenue and profitability
- High churn signals poor product-market fit or customer dissatisfaction
- Reducing churn boosts customer lifetime value and marketing ROI
- Informs strategies to improve retention and customer experience
