Churn rate is one of the most important metrics for any business, especially for ecommerce businesses. It’s a measure of how many customers or subscribers you lose over a period of time. A high churn rate is generally bad news, because it means you’re losing customers faster than you’re gaining them.
There are a few different ways to calculate churn rate, but the most common method is to simply take the number of customers you had at the beginning of a period, and subtract the number of customers you had at the end of that same period. The resulting number is your customer churn rate.
For example, let’s say you had 1,000 customers at the beginning of January. But by the end of the month, you only had 950 customers. Your customer churn rate would be 50 for that month.
Churn rate is typically expressed as a percentage, so in this case it would be 5%. This number can be useful on its own, but it’s often more helpful to compare your current churn rate to your historical churn rate. This will give you a sense of whether your business is improving or worsening in terms of customer retention.
There are a few different ways to reduce churn rate, but some common strategies include offering discounts or incentives for loyalty, improving customer service, and making it easy for customers to cancel their subscription or membership.
How Does Shopify Calculate Churn Rate?
Shopify calculates churn rate by taking the number of customers at the beginning of a period and subtracting the number of customers at the end of that same period. The resulting number is Shopify’s customer churn rate.
PRO TIP: If you are thinking about using Shopify to calculate your churn rate, beware! There is no guarantee that Shopify’s calculation will be accurate, and it could potentially lead to inaccurate conclusions about your business.
Conclusion:
Churn rate is an important metric for ecommerce businesses because it’s a measure of how many customers are lost over time. The most common way to calculate churn rate is by taking the number of customers at the beginning of a period and subtracting the number of customers at the end of that same period.
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