How is it Calculated?
Posted: Sun Jan 19, 2025 10:39 am
To obtain this metric, you first set a specific time period. Then, you establish a relationship between the total number of customers or subscribers and the number of them who have cancelled during that period.
Formula
Churn Rate = customers who cancelled / total customers x 100
What is a Churn Rate percentage
Through the Churn Rate percentage, companies detect when it is necessary to implement loyalty, pre-sale and post-sale actions.
In addition, it is an opportunity to evaluate the behavior of algeria whatsapp resource the target audience and design personalized strategies for it.
There is no stipulated percentage that must be reached, as getting to 0% is practically impossible. On the other hand, the numbers vary according to each particular company or industry.
Typically, the range is 1% to 17%, and in most cases it is considered alarming when it exceeds 15%.
To calculate the Churn Rate, you first set a specific time period. Then, you establish a relationship between the total number of customers or subscribers and the number of them who have cancelled during that period.
Why does the Churn Rate percentage vary so much?
The variation is due to the different types of markets and their different magnitudes. A churn rate percentage may be negative for one industry, but considered positive for another.
It depends on multiple factors such as supply and demand, the type of target audience, the duration of contracts with clients and even the prices stipulated by each company.
Industries
There are multiple causes that affect the attrition rate in different industries. The highest attrition rates can be found in industries that do not provide essential services: an example of this is the entertainment industry.
Another variation depends on the type of business model. B2B “Business to Business” models have a lower percentage than B2C “Business to Consumer” models.
High ARPU
ARPU stands for 'Average Revenue per User'. This ratio is used to measure the amount of money you are expected to earn from a single customer. To calculate it, you divide your total revenue by the total number of users or subscribers.
The amount of revenue per user influences whether our churn rate percentage increases or decreases. Industries with a high ARPU have a lower churn rate percentage.
If we think about it as users, we are more likely to unsubscribe from subscriptions like Netflix or YouTube, which are not essential, but not from car insurance coverage. If we keep a service and pay a high price for it, it is surely because we need it.
Therefore, industries with low ARPU have a churn rate of approximately 3% to 16%, while those with high ARPU have a churn rate of approximately 2% to 4%.
Formula
Churn Rate = customers who cancelled / total customers x 100
What is a Churn Rate percentage
Through the Churn Rate percentage, companies detect when it is necessary to implement loyalty, pre-sale and post-sale actions.
In addition, it is an opportunity to evaluate the behavior of algeria whatsapp resource the target audience and design personalized strategies for it.
There is no stipulated percentage that must be reached, as getting to 0% is practically impossible. On the other hand, the numbers vary according to each particular company or industry.
Typically, the range is 1% to 17%, and in most cases it is considered alarming when it exceeds 15%.
To calculate the Churn Rate, you first set a specific time period. Then, you establish a relationship between the total number of customers or subscribers and the number of them who have cancelled during that period.
Why does the Churn Rate percentage vary so much?
The variation is due to the different types of markets and their different magnitudes. A churn rate percentage may be negative for one industry, but considered positive for another.
It depends on multiple factors such as supply and demand, the type of target audience, the duration of contracts with clients and even the prices stipulated by each company.
Industries
There are multiple causes that affect the attrition rate in different industries. The highest attrition rates can be found in industries that do not provide essential services: an example of this is the entertainment industry.
Another variation depends on the type of business model. B2B “Business to Business” models have a lower percentage than B2C “Business to Consumer” models.
High ARPU
ARPU stands for 'Average Revenue per User'. This ratio is used to measure the amount of money you are expected to earn from a single customer. To calculate it, you divide your total revenue by the total number of users or subscribers.
The amount of revenue per user influences whether our churn rate percentage increases or decreases. Industries with a high ARPU have a lower churn rate percentage.
If we think about it as users, we are more likely to unsubscribe from subscriptions like Netflix or YouTube, which are not essential, but not from car insurance coverage. If we keep a service and pay a high price for it, it is surely because we need it.
Therefore, industries with low ARPU have a churn rate of approximately 3% to 16%, while those with high ARPU have a churn rate of approximately 2% to 4%.