Customer Churn Rate

Customer churn rate measures the share of customers lost during a specified period under a clearly defined counting method. It is most useful for recurring relationships, such as weekly housecleaning or ongoing lawn maintenance. A company may count customers who canceled a service agreement rather than people who simply have not ordered a one-time repair again. Churn differs from customer retention, which looks at continuing relationships, and from customer lifetime value, which considers economic contribution over time. Business owners should define active customers, the observation period, and exclusions before calculating a rate. Without those definitions, comparisons can be misleading.