Churn Rate is the percentage of customers that a business loses in a specific timeframe. It can refer to account closures, subscription or contract cancellations, customers shopping elsewhere, etc. It is calculated by dividing the number of losses during a set period by the number of customers at the beginning of that period, and then multiplying by 100 (5 customers lost : 100 starting customers x 100 = 5% churn rate).
Good churn rates differ from sector to sector, but the more niche an industry is, the lower the percentage should be. To achieve growth, a company’s customer acquisition rate must exceed the churn rate. In eCommerce, Churn Rate can be reduced by optimizing merchandizing, automating marketing, building brand loyalty, and providing good customer support.
