Definition

churn rate (Predictive Churn Modeling)

Churn rate is a measure of customer or employee attrition, and is defined as the number of customers who discontinue a service or employees who leave a company during a specified time period divided by the average total number of customers or employees over that same time period. For example, churn rate has been an ongoing concern of telephone and cell phone services in areas where several companies compete and make it easy to transfer from one service to another.

Changes in a business' churn rate can provide feedback for a company as it may indicate customer response to service, pricing, competition and so on, as well as the average length of time an individual remains a customer. As such, churn rate is an important business metric. To estimate future churn rates, predictive technology is sometimes applied, in a process known as predictive churn modeling.

This was last updated in November 2010
Posted by: Margaret Rouse

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