Defining Churn Rate

While most of us use the term "churn rate," it's shocking how many different definitions for this data point there are floating around.

We enjoyed Shopify's take on this:

Unfortunately, churn rate is actually an extremely important metric. Why? To put it in modern startup terminology, churn rate is an ideal actionable (non-vanity) metric. As Eric Ries describes in his classic blog post, understanding your company metrics at a customer level is key to understanding the effects of your actions. It is your customer level metrics that will inform you if you are currently on a path to profitability, or if your current profits are sustainable. And at the heart of customer level metrics is churn rate: the measurement of the likelihood of your customer to become an ex-customer.

Read more over on the Shopify blog.