Churn rate

Hello kiddo! Do you know what happens when water swirls in a drain? That is what happens when customers stop using a product or a service, this is called churn. The churn rate is like the number of drops that are missing from the water when it is swirling down the drain.

When a company has customers who stop using their product or service, it is important to measure this to know how many customers are leaving. That's why companies calculate the churn rate. It measures how many customers are leaving compared to how many customers the company has in total.

For example, if a company has 100 customers and 10 of them stop using the product or service during a certain period, the churn rate would be 10%. This means for every 100 customers, 10 have left the company.

A high churn rate is not good because it means a lot of customers are leaving the company which can cause less profit for the company. A low churn rate is good because most customers are staying with the company.

So, in conclusion kiddo, the churn rate is like looking at how many people are leaving a swimming pool when the water is swirling down the drain. It helps the company to understand how many customers are leaving the company so they can improve their product or service to keep more customers happy and make more money.