You can’t stop customer churn if you don’t know how or where it’s coming from. The churn rate is, in fact, calculable. The first step is to define the time period that you want to measure. Most companies will choose to measure by month, but just pick whatever that suits your data needs.

1. Customer attrition formula

Number of churned customers/ Total number of customers

This figure shows the number of customers who churned your service in a predefined time period out of the total number of customers you had also during that period. Let’s take an example. If a company had 70,000 customers on 1 January and only 56,000 on 31 December, then the attrition rate for the company would be 20% (i.e., the company had 20% fewer customers at the end of the period than at the beginning of that period) 

Any good analytics tool will be able to calculate your churn rate for you. These tools save you from the troublesome progress of monitoring trends over time and make sure that you are moving towards the right direction.

So what is a good or a bad customer attrition rate? As hopeless as it sounds, it is impossible to find a straightforward answer as there are several different factors that need to be considered, which include the particular industry of the company, business model, the level of competition and the cost of customer retention.

2. The benefits of tracking your customer churn rate  

To put it simply, if you track and then start reducing your customer churn rate, your revenue will be visibly higher and your growth rate will be helped to stay positive. Besides directly tracking churn, there are other factors you could take into account:

• How much do your customers spend on products/services?
• What could be done to receive positive responses to further customer retention?
• As a business, how much would you expect for customer retention cost?

Beyond knowing your customer churn rate, understanding why customers stop taking advantage of your products and services is just as important. Reducing the churn rate has to be a priority for any long-term successful business that wants to benefit from the highest possible revenue.