Financial Glossary
Customer Churn Rate
Customer churn rate is the percentage of customers who stop doing business with a company during a given period. It is typically calculated by dividing the number of customers lost during the period by the number of customers at the start of that period, expressed as a percentage. It is a core health metric for subscription, membership, and recurring-revenue businesses.
Problem & Application
For any business with recurring revenue, from a SaaS startup to a membership-based campground or a property manager retaining owners, churn quietly determines whether growth compounds or leaks away. A high churn rate forces constant new-customer acquisition just to stay flat, which is expensive and unsustainable. Tracking churn by cohort reveals whether retention is improving and where the business is losing people.
In Short
Customer churn rate shows how well a business keeps the customers it already won, and small improvements compound into outsized revenue gains.