Churn Rate

Reviewed by Vineeth | Updated on Sep 28, 2020

Introduction

The churn rate is also referred to as the attrition rate or the customer churn. The churn rate is the rate at which the customers are stopping to do business with an organisation.

The churn rate is, generally, expressed as the percentage of people who have subscribed and go on to discontinue availing the service of an organisation over a given timeframe.

Sometimes, the churn rate is also referred to as the rate at which the employees leave their jobs over a given period of time. For companies to expand their client base, their growth rate (measured by the number of new customers) must be far greater than their churn rate.

Breaking Down Churn Rate:

A high churn rate can have adverse effects on impede growth and profits of the company. The churn rate is a crucial factor in the telecom sectors. In the majority of the areas, most of these entities contest, making it way simpler for individuals to move from one provider to a different one.

The churn rate does not just cover the time at which the customers switch providers, but it also covers the time at which the customers end service without moving to a different provider. This measure is very important for companies that run on subscribers and their revenues are mostly coming due to the fee paid by the subscribers for the subscription.

Example:

The churn rate is a handy measurement for the companies operating in the telecom sector. This includes internet providers, cable TV connection, telephone service providers, and so on. Most customers have several options from which they can choose from. They will, generally, compare the features and the cost at which they would be getting the service. The churn rate will help a company in determining how it is going to measure up to and give a stiff competition to its competitors.

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