What is customer churn?
Customer churn is when customers stop doing business with a company, such as canceling a subscription or not renewing a contract. Churn rate is the percentage of customers lost in a period: customers lost divided by customers at the start of the period, times 100.
Formula
Churn rate = (customers lost ÷ customers at start) × 100
Example: 1,000 customers at start, 40 cancel → 4% monthly churn.
Types
| Type | Example |
|---|---|
| Voluntary | Customer cancels |
| Involuntary | Failed payment |
| Revenue churn | Downgrades and cancellations |
Common causes
Poor onboarding, unresolved issues, weak value, better competitor offers and price.
Reducing churn
Monitor health scores, act on warning signs, fix repeated support issues and run proactive check-ins.
