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Customer Churn (Churn Rate)

A metric that measures the percentage of customers who stop using a company's product or service within a given time period. Churn rate is an essential indicator of customer retention and satisfaction, as well as a critical factor in assessing the overall health and growth potential of a business.

The churn rate is calculated by dividing the number of customers lost during a specific period by the total number of customers at the beginning of that period, then multiplying by 100 to express it as a percentage.

Related Terms

Annual Recurring Revenue (ARR)

Annual Recurring Revenue (ARR) quantifies predictable yearly revenue from subscriptions. It excludes one-time fees, helping businesses assess financial health, growth, and stability for strategic planning and benchmarking.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) measures the total expense of gaining a new customer, including marketing and sales costs. It helps assess acquisition efficiency and ROI by dividing costs by new customers.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) estimates total revenue from a customer over their relationship. It guides acquisition and retention strategies, calculated as purchase value × frequency × customer lifespan.

Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is the predictable revenue from subscriptions each month, including new sign-ups, renewals, and upsells, providing insight into a company's financial health and growth.
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