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Glossary of Mobile Advertising Terms

Churn Rate

What is Churn / Churn Rate?

Churn Rate (also known as Attrition rate) is a percentage of customers/subscribers that discontinue their subscription during a given time period.

Why is knowing the Churn rate important

This is an important part for any subscriber-based business (internet providers, mobile network operators and similar). Companies that wish to have a healthy amount of subscribers, must learn how to decrease their churn rate. If the customers aren’t sticking long enough, a company is going to have problems.

This is especially true in some geographical areas, where there are several companies competing with each other, so it’s easy to lose customers to another company. Although the customer doesn’t have to switch over, it’s enough to just cancel the subscription and the company is going to see an increase in their churn rate.

How is the Churn rate calculated?

The churn rate is calculated by dividing the number of customers who canceled their subscription with a total number of customers acquired during a designated time period.

Statistics show that having a positive relationship with customers helps decrease churn rate, as it leads to customer loyalty. On the other hand, a negative relationship results in a higher churn rate and that leads to lower profits. So, anything that can improve customer experience and satisfaction should be a priority when trying to decrease the churn rate.