Churn Rate

What is Churn Rate?

Churn rate measures the percentage of customers who stop using a company's product or service during a specific period. It’s calculated by dividing the number of churned customers by the total number of customers at the beginning of the period. A high churn rate can indicate dissatisfaction with the product or service, poor customer support or better alternatives in the market.

Reducing churn rate is critical for maintaining a stable customer base, ensuring long-term business growth, and upholding a healthy Annual Recurring Revenue (ARR). Companies often implement strategies such as improving customer service, enhancing product features and offering loyalty programs to retain customers. Regularly monitoring churn rate helps businesses identify potential issues early and take corrective actions to improve customer retention.

Related terms

EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a financial metric used to assess a company's profitability from its core operations.

Expansion Revenue

Expansion revenue refers to the additional revenue generated by your existing customers. It represents the growth in their spending beyond their initial purchase or contracted amount. In simpler terms, it's the money you earn from your customers when they buy more, upgrade their plans, or add new features and services.

Expense Report

An expense report is a document used by individuals or employees to record and report business-related expenses incurred during the course of their work.

Financial Reconciliation

Financial reconciliation, or account reconciliation, is the process of comparing two or more business records to confirm the information they contain matches. This ensures accuracy across the business, reduces revenue leakage, supports compliance processes and equips decision-makers with the most reliable data possible.

Financials First

‘Financials First’ is an approach or strategy in business software implementation where the financial management modules of an enterprise resource planning (ERP) system, like NetSuite, are implemented and prioritized before other modules or functionalities.

Forecast Variance

Forecast variance is the difference between a predicted result and the actual outcome over a given period for a variety of business activities.