Definition of customer churn rate

  • Meaning of the term churn rate in CRM software

    Customer churn rate (or attrition rate) designates the percentage of customers the company has lost over a given time period. Churn rate is a reverse side of retention rate, which shows the percentage of customers a company has retained over a specific period.

    There are several ways to calculate customer churn rate, one of the most practical one is the following:

    Customer Churn Rate = (Customers lost during the period/Total customers at the start of the period)*100,

    where:

    Customers lost = Total Customers at the start of the period + New customers during that period - Total Customers at the end of a period

    For example, you had 200 subscribers to your newsletter on Match 1st. In March 50 more people subscribed to your newsletter. However, the total number of your subscribers at the end of the month was 205.

    Customers lost: 200+50-205=45

    Churn rate = (45/200)*100=22,5%

    Thus, the churn rate of your subscribers in March is 22,5%. Each industry has different churn rates. However, a rule of thumb is that it's much cheaper and easier to retain customers rather than acquire new ones. Poor service and unsatisfying customer experience are among the main reasons why customers leave. That's why companies use advanced CRM software, like Bitrix24, which organize and monitor all interactions with potential or existing clients.

    If you are looking for free CRM software with over 20 sales and marketing tools, consider Bitrix24 CRM.
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