Churn rate, often referred to as attrition rate, is a vital metric indicating the percentage of customers or subscribers discontinuing your product or service. It represents the customers lost to competitors, underscoring the need for robust retention strategies. Calculated annually, it serves as a barometer for gauging customer loyalty amidst fierce competition, offering insights into the effectiveness of your marketing efforts and overall business sustainability.

Churn rate, often regarded as the attrition rate, plays a pivotal role within the AARRR framework, especially for businesses reliant on customers with recurring payment models. This metric is indispensable for understanding customer retention dynamics and identifying areas for improvement. To compute the churn rate, simply divide the difference between the total number of customers at the beginning and end of a specified time period by the total number of customers at the beginning of the period. This calculation unveils critical insights into customer behavior and satisfaction levels, guiding strategic decisions aimed at bolstering retention and maximizing revenue streams.

Churn Rate = (Total number of customers at the beginning – Total number of customers at the end) / Total number of customers at the beginning * 100

For instance, if you start a quarter with 2000 customers and end with 1500, the churn rate for that quarter would be:

Churn Rate = (2000 – 1500) / 2000 * 100 = 25%