courses › Growth & Marketing Math

Churn & Retention

level 25 course

Who leaves, measured against the group you started with.

In your head, jot if needed · no calculator why?

Opens at level 25.

Builds on: Funnels (not open yet) · Percentages in Business (not open yet)

the lesson

The idea, the techniques and a tip for each skill, right here. The Learn page adds worked examples for every skill and untimed practice.

Read the lesson · about 3 minutes

The idea

Churn is the share of the customers you started a period with who left during it. The denominator is always the starting group. Customers who join during the month don't change it, and they don't cancel out the losses: a business can grow while losing a fifth of its customers.

Retention is the other side: 10% churn means 90% retention. When churn repeats month after month, each month loses a share of whoever is left, so the losses shrink as the group shrinks.

Techniques

Lost over the starting group

Churn for one period.

Take the customers lost from the starting group.
Divide by the number you started with, not the ending number.
Multiply by 100. New sign-ups play no part.

worked example

Example: A plant-care service starts the month with 80 customers. 6 of them cancel, and 15 new customers join. What is this month's customer churn rate, as a percent?

6 ÷ 80 = 0.075.
0.075 = 7.5%.
The 15 new customers don't change it.

Answer: 7.5%

Keep a share each month

Churn repeats for a few months with no new sign-ups.

The share kept is 1 minus the churn: 20% churn keeps 0.8.
Multiply the customers by that share once for each month.

worked example

Example: You start with 500 customers. Assume you lose 10% of whoever is left each month, with no new sign-ups. How many customers remain after 2 months?

Each month keeps 0.9.
500 × 0.9 = 450.
450 × 0.9 = 405.

Answer: 405

Tips by skill

TipMonthly churn: Customers lost ÷ customers at the start of the month. Leave the new sign-ups out.
TipCustomers at month-end: Start with the opening count, subtract the cancellations, then add the sign-ups.
TipCustomers left after months of churn: Multiply by the share kept, 1 minus the churn, once for each month.

Watch out for

Dividing by the ending count. With 50 at the start, 5 lost and 12 new, churn is 10%, not 5 out of 57.
Netting the new customers against the losses. Churn counts only who left the starting group.
Taking 10% of the original group every month. Month 2 loses 10% of a smaller group, so 1,000 becomes 810, not 800.
For the month-end count, subtracting the sign-ups or adding the cancellations.

skills · practice stats

From rounds of this course only: box, review and test-out answers are left out. Once a skill has 40 tries, it compares your first 20 tries with your last 20.

Monthly churn par 15 s not tried yet
worked example
A month starts with 40 customers. 7 of them cancel, and 24 new customers join. What is this month's customer churn rate, as a percent?

Answer: 17.5%
1. Churn = customers lost from the starting group ÷ the starting group = 7 ÷ 40 = 17.5%.
2. New customers don't change the denominator.
Customers at month-end par 11 s not tried yet
worked example
A month starts with 400 customers; 8 cancel and 35 sign up. How many customers are there at month-end?

Answer: 427
1. 400 − 8 + 35 = 427.
Customers left after months of churn par 20 s not tried yet
worked example
You start with 10,000 customers. Assume you lose 10% of whoever is left each month, with no new sign-ups. How many customers remain after 2 months?

Answer: 8,100
1. Each month keeps 90% of the month before.
2. 10,000 × 0.9 = 9,000; × 0.9 = 8,100.

rest ladder

Win 3 of your last 4 rounds and the course rests. A win is 90% right, within 2× the round's par. Pass the review when it comes back and the next rest is longer.

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