Enter your starting customers and the customers you lost to get your churn and retention rates, plus your average customer lifetime.
Results are estimates for planning. Check the figures before you make a financial or health decision.
How to calculate churn rate
Divide the customers you lost by the customers you had at the start of the period:
Churn rate = customers lost ÷ customers at the start × 100
Retention rate is 100 minus churn. Average customer lifetime is 1 divided by churn, so a monthly churn of 5 per cent means customers stay about 20 months. To annualise a monthly rate, use 1 − (1 − churn) raised to the power 12. This is lower than simply multiplying by 12, because each month’s churn applies only to the customers who are still there.
Worked example
Using the default values in the calculator above:
| Input | Value |
|---|---|
| Customers at the start of the period | 1,000 |
| Customers lost during the period | 50 |
| New customers added, optional | 80 |
| Length of the period | Monthly |
| Result | Value |
|---|---|
| Churn rate per month | 5% |
| Retention rate | 95% |
| Average customer lifetime | 20 months |
| Annualised churn | 46% |
| Customers at the end | 1,030 |
What is a good churn rate?
Lower is better, and a good figure depends on your market. Businesses selling to consumers usually see higher churn than those selling to large companies on annual contracts. Track your own rate over time and watch for changes after price rises, product changes or support issues.
Tips and common mistakes
Do not count new customers who joined during the period in the starting figure. Churn compares lost customers with those you had at the start.
Use the same period when comparing. A monthly churn of 5 per cent is far worse than an annual churn of 5 per cent.
Look at revenue churn too. Losing a few large customers can hurt more than losing many small ones.
Frequently asked questions
What is customer churn?
The share of customers who stop buying or cancel in a given period.
What is the difference between churn and retention?
They are opposites. If churn is 5 per cent, retention is 95 per cent.
Why is annualised churn lower than monthly times 12?
Because churn compounds on a shrinking base. Each month's losses are taken from the customers who are still left, not the original group. Five per cent a month is about 46 per cent a year, not 60.
How do I reduce churn?
Improve onboarding, respond quickly to problems, ask departing customers why they leave and reward loyalty.