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Churn rate

Churn rate Definition

Churn rate is also sometimes called attrition rate. It is one of two primary factors that determine the steady-state level of customers a business will support.

In its broadest sense, churn rate is a measure of the number of individuals or items moving into or out of a collection over a specific period of time.

A clear distinction needs to be made between 'net churn' = overall loss of subscribers or members vs. 'gross churn' = absolute disconnections. The difference between the two measures is the number of new subscribers or members that have joined during the same period.

As such:

net churn (%) = gross churn (%) - new adds (%)

Example:

Given 100 members, in a given year 10 choose to leave, while 4 new members join. At the end of the year we thus have 94 members. Gross churn = 10% New adds = 4% Net churn = 6%




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