Customer Churn measures what?

Customer Churn measures what?

• A. Rate at which customers stop buying.
• B. Average order value.
• C. Customer acquisition cost.
• D. Number of new customers per month.

Answer: (A)

Churn measures how quickly customers stop buying from you. It’s a retention metric that shows the rate at which customers end their relationship or stop purchasing over a given period. It’s usually expressed as a percentage, for example monthly churn rate = number of customers lost during the month divided by the number of customers at the start of the month. If you begin with 200 customers and 20 leave, churn is 10%. This is different from other metrics: average order value looks at how much is spent per purchase, customer acquisition cost is the expense to bring in a new customer, and the number of new customers per month counts new sign-ups rather than attrition. Churn is especially important for subscription or repeat-purchase businesses but applies to any scenario where maintaining customers matters.

Churn measures how quickly customers stop buying from you. It’s a retention metric that shows the rate at which customers end their relationship or stop purchasing over a given period. It’s usually expressed as a percentage, for example monthly churn rate = number of customers lost during the month divided by the number of customers at the start of the month. If you begin with 200 customers and 20 leave, churn is 10%.

This is different from other metrics: average order value looks at how much is spent per purchase, customer acquisition cost is the expense to bring in a new customer, and the number of new customers per month counts new sign-ups rather than attrition. Churn is especially important for subscription or repeat-purchase businesses but applies to any scenario where maintaining customers matters.