Churn rate

What is the churn rate?

Churn rate is the percentage of customers who cancel or stop using your product or service over a specific period. In ecommerce and subscription businesses, it’s a key metric that reveals how well you’re retaining customers.

A good churn rate varies by industry, but for subscription ecommerce businesses, anything under 5% monthly is typically considered healthy. Lower churn means stronger customer loyalty and more predictable revenue.

How to calculate churn rate?

The churn rate calculation is simple:

Churn Rate = (Customers Lost During a Period ÷ Total Customers at Start of Period) × 100

For example, if you had 500 customers at the beginning of the month and lost 25, your churn rate would be 5%.

Why does churn rate matter?

Keeping your current customers is often more affordable than trying to win over new ones. High churn rates lead to lost revenue and signal deeper issues like poor product fit, lack of engagement, or failed onboarding. Understanding your churn rate helps you improve customer experience and grow sustainably.

How to reduce customer churn rate?

To lower churn:

• Guide them step by step after purchase or signup so they understand how to get the most value from your product or service.
• Let customers pause, switch, or downgrade instead of canceling altogether. It gives them control without walking away.
• Surprise long-term customers with perks, exclusive offers, or thank-you messages to show appreciation and build trust.
• Keep an eye on inactivity. If someone isn’t using your product, reach out with tips, reminders, or personal support.
• Use past behavior or preferences to make recommendations and offers feel more relevant and helpful.

Example of churn rate in ecommerce

A pet food subscription brand starts with 1,000 subscribers in January and ends with 950. Their monthly churn rate is 5%. By improving their delivery experience and adding rewards, they reduce churn to 2.5% the next month.

Driftcharge Tip

If a customer hasn’t engaged in a while, no logins, no purchases, send a friendly check-in with a helpful tip or offer. Catching disengagement early can turn a silent exit into a saved relationship.

Ganesh Pawar

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Ganesh Pawar is the founder of Driftcharge, a subscription management app designed to help Shopify merchants streamline and scale their subscription businesses. With a deep focus on solving real-world pain points—like legacy account page support, flexible subscription options, and advanced analytics—Ganesh is passionate about building tools that drive growth and retention.