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In 2004, Netflix was sued by its shareholders over its reported churn rates. The shareholders argued that Netflix “[used] an improper calculation of the rate that produced an artificially low churn rate.” A judge threw out the case, ruling that there is no single industry-wide definition of churn rate.
Clearly, churn rate is a critical metric for any subscription business. But there are also a variety of opinions about how to calculate it.
In this guide we'll explore:
What is Customer Churn
What does churn mean for a subscription business?
How to Calculate Churn
What are the common formulas used to calculate churn.
How to Avoid Mistakes
Avoid common pitfalls in your churn calculation with these easy tips.