Churn

Formal

A sexy technical term for the rate at which a business loses its customers - so it is a measure of customer loyalty. If there are 100 customers at the start of the year and 10 new ones are won, and 10 disaffected customers leave, then we still have 100 customers. However we have ‘churned’ 10% (10 out of 100) of our customer base in that year. Reducing ‘churn’ has a massive exponential impact on customer loyalty and profitability.

Real-world Example

A subscription software company starts the year with 1,000 customers and loses 80 of them by year-end, excluding new sign-ups. That's an 8% annual churn rate.