Glossary

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Churn Rate

What is Churn Rate ?

The percentage of app users who uninstall or stop engaging with the app over time. When a user churns, one of two things happens: either the app contains being used (no more sessions are being logged), or the user removes (uninstalls) it from their device. However, to put it simply, the churn rate is the percentage of customers who cease using (or leave) an app after a certain amount of time has elapsed. A variety of factors causes user churn. Some users may not like an app, while others may have no desire to return. The number of consumers who have left your service divided by the total number of customers is used for the Churn Rate Formula.

The number of churned customers represents the percentage of real consumers who have dropped out of your service during the period under consideration. It appears simple to calculate churn rate, but (1) how we define those two quantities can have a significant impact on the output, and (2) business-dependent external factors can cause havoc with our comprehension of the resulting figure. The total number of customers for a month, for example, isn't a well-defined idea because that number changes during the month as new sign-ups and cancellations. You have three types of clients each month: those who signed up before the month began, those who signed up during the month, and those who signed up after the month started. These clients' contracts are up for renewal at the end of the current month. Second, there are new customers during the month, and third, there are newly churned customers. Depending on how long you're tracking, you may be examining client churn rates for a single week, month, quarter, or year. Additionally, you need to make sure that your churn rate calculation is stable over time.

A monthly computation that's normally correct may suddenly become dramatically erroneous when you change it to a quarterly analysis. There could be a personal strategy and a business plan. Churn rates will be drastically different between the two, potentially as much as 15% monthly vs. zero percent. When you use an aggregated number, the differences between your customers are dissolved, and this can lead to a misinterpretation of your churn number. Growing a high-churn customer segment could be a mistake for a larger overall churn rate, which could lead you down the wrong route of trying to remedy a non-existing churn issue.

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