Churn

Definition

Churn refers to the rate at which customers or subscribers stop using a company's product or service. It is typically measured as a percentage of the total number of customers or subscribers. High churn rates can indicate that a company's product or service is not meeting the needs or expectations of its customers, or that its competitors are offering a better product or service.

Significance

The significance of churn is that it can have a major impact on a company's revenue and profitability. High churn rates can lead to a decline in revenue, as well as increased marketing and customer acquisition costs as the company must constantly replace lost customers.

Use Cases

A common use case for measuring churn is in the subscription-based business model such as SaaS (Software as a Service), where companies need to track the rate at which customers cancel their subscriptions. This information can be used to identify and address the root causes of churn, such as poor product quality or lack of customer support, in order to reduce the rate of churn and improve the overall health of the business.