Churn rate is the share of customers who leave over a given period, usually a month or a year. You calculate it by dividing the customers you lost by the customers you started with. A 5 percent monthly churn means you lose 5 of every 100 customers each month.
Why it is so important
Churn works against you quietly. You can be winning new customers and still shrink if they leave faster than you replace them. It also drags down customer lifetime value, which makes acquisition math worse across the board.
What usually causes it
- The product or service did not deliver what people expected.
- Poor onboarding, so people never reached the value.
- Weak ongoing communication, so they drift away.
Cutting churn even a little tends to pay off more than almost any acquisition tactic.