Are you tracking your customer churn rate? If so, big ups to you. If not, you really need to start. And it doesn’t matter if you have an eCommerce biz selling wine, or a business dashboards company selling a month-to-month subscription model - everyone needs to keep an eye on this important metric.

Simply put, customer churn rate is the amount of customers or subscribers who cut ties with your service or company during a given time period. They ‘churned’.

And now, here’s how to calculate it: First, remember the ‘given time period’ mentioned above. That’s why we bolded it. If you sell a monthly recurring product or service, the time period is 1 month. If, on the other hand you sell wine online, you might, after looking at past purchase behavior trends and seasonality, set the time period at 4 months.

So, let’s think about the monthly service or product example. The most common formula would be the number of customers lost divided by the number of customers at the start of the month.

Calculating your customer churn rate

It’s pretty simple, and very powerful. What it shows is how sticky your offering is and if you’re providing an excellent customer experience. You need to track and report on this on a regular basis, and always work to minimize your customer churn rate. Also look for spikes or dips, and act on what caused those particular aberrations.

In an upcoming post, we’ll talk about some more advanced reporting on, and ideas to minimize, your customer churn rate. But don’t wait for that, start calculating yours now!