Measuring Marketing

Chapter 32 Churn Rate

Measurement Need

Part of marketing’s challenge is knowing how many customers they lose versus how many are retained since not all customers are loyal, profitable, or desirable.

Solutioni

Churn measures customer attrition expressed as percentage of customers a business loses over a specific period of time. Churn is calculated as follows:

$Churn=\frac{C_{bt}-C_{et}}{C_{at}}$

Where

Cbt = customers at beginning of time period t

Cet = customers at end of time period t

Cat = customers at beginning of time period t

Churn affects companies everywhere, and rates vary, often dramatically, by sector. Mobile phone carriers in Europe have churn rates between 20%–38%. Wireless carriers in the United States could improve earnings ...