How to Calculate Churn Rate in 4 Easy Steps
To calculate churn rate, you might want to know the number of customers that left your service or product.
Churn rate = Number of customers that left your service or product / Number of customers you currently have
Churn rate can be used to measure how well your business is doing, as well as help identify a problem with which you might need to address.
The Importance of Monitoring Churn Rate for Your Business
If your churn rate is too high, your business will be in trouble. It will be difficult to maintain a customer base since they are losing interest and trust in your brand.
It's important to monitor and map your churn rates so that you can find out what problems are within the system. Some of the causes of high churn rates include:
A lack of attention from the sales team towards customer retention; poor product quality; and lack of transparency on pricing for different tiers.
4 Steps to Calculating Your Business' Churn Rate
A churn rate is a metric for measuring how often customers leave your business. Calculating your business's churn rate is necessary for projecting and managing customer retention.
Here are the steps to calculate your business's churn rate:
1. Calculate your Customer Acquisition Cost (CAC)
2. Divide CAC by Monthly Recurring Revenue (MRR)
3. Divide by 12 to find total monthly customers lost over the course of a year
4. Multiply that number by 100% to find the percentage of customers lost in any given month