Unit economics
Churn rate
The share of customers who stop buying in a period, and therefore the reciprocal of how long a customer lasts.
Also called Отток
Formula
Churn = Customers lost in period ÷ Customers at start of period
- Customers lost
- measured against a definition of “lost” that is written down before it is counted
Expected lifetime ≈ 1 ÷ churn. Revenue churn and customer churn are different numbers and diverge sharply when the customers who leave are not the ones who spend.
For a business without subscriptions, churn requires an arbitrary decision: how long a silence counts as gone. Whatever is chosen — ninety days, six months, twice the median repurchase interval — it has to be fixed and stated, because every downstream number moves with it.
Revenue churn can be negative: existing customers expanding faster than others leave. A company with negative revenue churn grows without acquiring anyone, which is the strongest position in the model and worth measuring separately.
Dividing this month's losses by this month's larger customer count flatters the rate every month the company grows. Divide by the count at the start of the period, and measure the cohort rather than the pool.
Quantities derived from the counts. Each is only as sound as the definitions beneath it.
Is an input to
- LTV
- The contribution a customer produces across their whole relationship with the business, discounted for the fact that it arrives later.
An error in this figure does not stay in it. It reaches two numbers above it, and each of those is quoted as though it were measured.
A definition is free. Being answerable for the figure it produces is the part that is bought, and this term is a working part of the engagements below.
- Client-base reactivation
- The cheapest customer already gave you their contact details.
The definitions are the easy part. Whether the figure on your dashboard was computed this way is a different question, and usually the more expensive one.