Churn rate is the percentage of customers (or revenue) lost during a given period. It is calculated by dividing the number of customers lost by the number of customers at the start of the period, then multiplying by 100. For example, if you start the month with 1,000 customers and lose 50, your monthly churn rate is 5%.

What is the difference between customer churn and revenue churn?

Customer churn measures the percentage of customers who stop buying. Revenue churn measures the percentage of recurring revenue lost. They can differ significantly — losing a few high-value customers can produce high revenue churn even with low customer churn. Tracking both gives you a complete picture of retention health.

What is a good churn rate for ecommerce?

Good churn varies by business model. SaaS and digital products: 3-8% monthly average (good is under 3%, excellent is under 1.5%). Subscription boxes: 10-15% monthly average (good is under 8%). Consumables: 6-10% monthly average (good is under 5%). Fashion repeat purchases: 15-25% monthly average (good is under 12%). General ecommerce: 20-30% monthly average (good is under 15%). Always benchmark against your specific business model.

How do I reduce churn rate?

The most effective churn reduction strategies are: 1) Improve post-purchase onboarding. 2) Use email sequences to drive reorders. 3) Identify at-risk customers through behavioral signals. 4) Offer subscriptions for consumable products. 5) Build loyalty programs to increase switching costs. 6) Collect and act on feedback from churned customers.

What is the relationship between churn rate and retention rate?

Churn rate and retention rate are inverses: Retention Rate = 100% - Churn Rate. If your monthly churn rate is 5%, your monthly retention rate is 95%. Retention focuses on customers kept, churn focuses on customers lost. Both are essential for understanding customer lifetime value.

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Churn Rate
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