Churn rate — Customers you lose

The percentage of customers or subscribers who stop buying or cancel in a given period.

What it means

Churn rate is the percentage of customers or subscribers who stop buying from you or cancel during a certain period, such as a month or a year. It is the opposite side of retention. High churn is like filling a bucket that has a hole in it.

How it works

You need two numbers: how many customers you had at the start of the period, and how many of those you lost during it.

Churn rate = customers lost during the period ÷ customers at the start of the period × 100

New customers who join during the period are left out, so they don't hide the losses. Retention rate looks at the same group from the other side: the share who stayed.

For subscription businesses, "lost" means cancelled. For shops without subscriptions, you define it yourself, for example "a customer who hasn't ordered in 90 days".

A simple example

A Pune café runs a monthly coffee subscription. On 1 March it has 200 subscribers. During March, 20 of them cancel, and 35 new people sign up.

Churn rate = 20 ÷ 200 × 100 = 10%

So the café's March churn is 10%, and its retention is 90%. Total subscribers grew, yet one in ten existing customers left, which is worth investigating.

Why it matters

Winning a new customer usually takes more effort and ad spend than keeping an existing one. High churn quietly eats into growth and lowers customer lifetime value. Tracking churn helps you spot problems with quality, pricing or service early, and shows whether retention efforts like loyalty offers are working.

Beginner tips

Always state the time period, since monthly and yearly churn are very different numbers.
Ask leaving customers why, using a short exit survey or a quick call.
Use cohort analysis to see whether newer customers churn faster than older ones.
Common mistake: subtracting new sign-ups from lost customers, which hides the real churn.