Churn Rate refers to the percentage of customers who stop using a product or service within a given period of time. It is a crucial metric for businesses to measure customer retention and understand the rate at which their customer base is shrinking.
Understanding churn rate is vital for businesses because it directly impacts their revenue and growth. By monitoring this metric, companies can identify potential issues, improve customer satisfaction, and implement strategies to reduce churn. A high churn rate can indicate problems in product quality, customer service, pricing, or competition.
To calculate churn rate, divide the number of customers lost during a specific period by the total number of customers at the beginning of that period. Multiply the result by 100 to express it as a percentage.
For example, if a company starts with 500 customers and loses 50 customers in a month, the churn rate would be (50/500) * 100 = 10%.
Monitoring churn rate regularly allows businesses to:
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Ruben, the founder of Boei, leverages over a decade of consultancy experience at Ernst & Young to optimize lead generation. Boei specializes in converting website visitors into qualified leads. Outside of work, Ruben is passionate about crossfit and enjoys gaming occasionally.
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