Customer churn rate or attrition rate is the rate at which a company loses its customers in a given period. In businesses with subscription models, churn rate means the number of subscribers who cancel or choose not to renew their subscriptions. A higher customer churn rate, correlates with more customers stopping business with the company, while a lower churn rate correlates with more customers that the business is able to retain.
Churn rate is calculated as: (Lost Customers ÷ Total Customers at Beginning) x 100. Suppose a business had 250 customers at the start of the month and 10 customers dropped by the end of the month. In this scenario, the churn rate calculation would be (10 ÷ 250) x 100 = 4% monthly churn rate.