What does "Churn Rate" mean?

What is Churn Rate?

Churn rate is a term used to describe the proportion of users, clients, etc. who are lost during a specified time period, e.g. months, weeks, days. Consequently one speaks of daily churn, weekly churn and monthly churn where "churn" is a shorthand for churn rate.

A churn rate can apply to different phenomena. An often used churn rate is the bounce rate of a website: the percentage of users who perform only a single action on a website before the session ends (called a "bounce"). In Software as a Service business models the customer churn rate is a key performance indicator related to customer satisfaction which also has direct correspondence to the business' profitability. In e-mail marketing churn can refer to the rate with which users unsubscribe from a newsletter or other e-mail list and is usually a secondary KPI.

Churn can be used to describe the issue of cookie churn: a serious problem when running an A/B test with a test duration over several weeks. In this context it is not an outcome variable but an issue that needs to be addressed when deciding on the statistical model to be tested.

Like this glossary entry? For an in-depth and comprehensive reading on A/B testing stats, check out the book "Statistical Methods in Online A/B Testing" by the author of this glossary, Georgi Georgiev.