What is Churn Rate?

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A churn rate is a metric that shows you how many customers or employees leave a company during a given period. It can show you whether there are problems with the product, service, or how you treat employees.

Keeping a low churn rate is vital to growing and sustaining a successful business.

A high churn rate can be costly as you constantly need to look for new customers or employees. The lower it is, the better.

For example, if you start the year with 100 employees and 10 leave during the year, the churn rate would be 10%.

Customer churn rate formula

[NUMBER OF CUSTOMERS LEFT] / [NUMBER OF CUSTOMERS AT THE START OF THE PERIOD] * 100

Employee churn rate formula

[NUMBER OF EMPLOYEES LEFT] / [NUMBER OF EMPLOYEES AT THE START OF THE PERIOD] * 100

To reduce the churn rate, you need to identify why customers are leaving and address those issues.

For example, if they leave because they’re unhappy with your product or service, you need to improve it.