What is Churn Rate?

by Investing School on June 16, 2010

The church rate is also referred to as attrition rate. It is one of the two important factors that will be able to determine the steady level of customers a business is able to support. More broadly, the churn rate is a measure of the number of people or items that come in and out of a collection over a specified time period.

You can use churn rate in a variety of different contexts. It is used mostly in business when referring to a contractual base. For example, it is an important aspect of a business that has a subscriber-based service. These would include mobile telephone and Pay TV companies. Churn rate is also used when referencing turnover in peer-to-peer networks. It is also an English word idiom that means to agitate or mix up while producing violent motion.

Churn rate refers to the number or proportion of number who are no longer customers for the company during a certain time period. This number could be an indicator that the customers are not satisfied or it could mean that the customers were able to find “a better deal” elsewhere. It could also deal with customer simply going through a certain life cycle. The churn rate can be lowered if the company does certain things. The company can discourage customers from changing to another company putting it into the contractual agreement. A company can also use customer loyalty program that can encourage retention. It is possible to get an inflated churn rate number because a customer may drop out only to reinstate within the same year.

Promote or Save This Article

If you like this article, please consider bookmarking or helping us promote it!

Print It | Email This | Del.icio.us | Stumble it! | Reddit |

Related Posts

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: