Churn rate, also called customer attrition rate, measures the percentage of customers who stop doing business with a company during a specific period. It's the inverse of retention rate: if 80% of customers are retained, churn rate is 20%.
High churn is expensive because it means constantly replacing lost customers just to maintain revenue, let alone grow. Understanding why customers churn—through exit surveys, customer feedback, and data analysis—helps identify fixable issues.
Churn analysis often reveals different churn profiles: some customers leave immediately after first purchase, others after a year. Addressing early churn might require better onboarding and first-purchase experience, while later churn might indicate product quality or competitive issues.