Churn Rate

In an ecommerce, the term “churn rate” refers to the subscriber turnover of the business. If a customer that has subscribed to a site or service chooses to terminate their relationship with the vendor, this increases the business’ churn rate.

How Churn Rate Works

Churn rate is expressed as a percentage of customers that leave the business within a prescribed time period. Analyzing the churn rate gives an indication of customer satisfaction (a high churn rate may indicate that customer care is lacking). Though, there can be other reasons for a high churn rate. If a business offers incentives like free gifts or discounts for customers who subscribe, these customers may unsubscribe and then subscribe again later, in order to take advantage of the special offer.

It’s important to ascertain the cause of the churn rate and address these issues to retain customers or eliminate areas where customers may be able to abuse the system and take undue advantage of the incentives offered to them.