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What is churn?

In a nutshell, churn is the rate at which existing customers have ended their relationship with your business. Churn can happen to businesses with top-notch products and services, so it's important to keep an eye on your churn rate so you can identify issues and resolve them. To calculate your simple month-to-month churn rate, use the formula (# of Customers at period start / # of Customers at period end) / (# of Customers at period start). Be sure to calculate the churn rate for existing and new customers separately.

What can churn tell me?

A high churn rate means your business has a low retention rate. Of course, some churn is to be expected, but retaining a customer is always less expensive than acquiring a new one. Your churn rate can also tell you the health of your customers. If you can expect a given percentage of your customers to churn, it may be worthwhile to understand why. Gathering data on the interactions customers have with your shop will enable you to recognize at-risk shoppers. Once you recognize the symptoms of an at-risk shopper, you can then figure out their pain points and figure out ways to retain them.