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Customer churn refers to how many customers you’ve lost during a period, while revenue churn can refer to the annual or monthly recurring revenue change from losing customers. Depending on your business, churn could apply to someone who stops using your service, uninstalls your app, downgrades their plan, or cancels a subscription.
Your churn rate, or attrition rate, is the percentage change you measure during a period. For example, if you start the month with 1,000 customers and end with 900, you have a 10% customer churn rate. Conversely, you had a 90% renewal rate.
While every business will experience churn, a high churn rate could indicate that you need to change something about your product or service. Often, it’s more expensive to acquire a new customer than to keep an existing customer, so focusing on decreasing your churn rate can be important. Additionally, as your company grows, even a small percentage churn can become quite hard to offset with new bookings.
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