Glossary of Marketing Studies and Research
Key indicator that measures the loss of customers. Also called attrition rate.
It can concern customers that did not buy a product again or that have left the company in a specific period of time.
The churn is calculated as follows :
Number of customers lost / Total number of customers.
A low rate means that customers are loyal and thus, satisfied by the brand. This has consequences on the company’s profitability in the short, middle and long term.
Churn rate is commonly calculated to evaluate the average life of a customer subscription.
A monthly churn rate of 20% means that customers are loyal during 5 months n average (1/0,2).
Churn rates are increasing today. Loyalty rates are falling down and customers are more likely to be dissatisfied.