What is churn rate?

Glossary What is churn rate?

What is churn rate?

Churn rate is the percentage of users who stop using an app within a specific time frame. This could be due to user inactivity, app uninstallation, or discontinuation of a subscription service, all of which contribute to the overall churn rate.

The specific definition of churn depends on the app's vertical and business goals. For example, customer churn rate refers to the segment of users who have stopped using the app's products or services. This is especially relevant for apps employing a subscription model.

Additionally, churn rate is crucial for evaluating user retention, optimizing marketing strategies, and improving overall app performance.

Why is churn rate important?

A high churn rate indicates that you’re spending a lot of money on user acquisition (UA) but not getting the maximum return on investment (ROI) from the user. By identifying the issues, you can improve user retention and revenue. Some app verticals, such as hyper casual gaming, anticipate high churn rates and adjust their business strategies accordingly.

How to calculate churn rate

The churn rate calculation formula varies based on your specific needs. To tailor your churn rate calculation, first, decide what to measure, such as inactive users, users who have uninstalled the app, or those who have canceled a subscription.  Next, choose your time frame. Do you need to measure the annual churn rate, monthly churn rate, or another period?

In-app event tracking can provide insight into where users tend to churn within the lifecycle. This can indicate which time period is most beneficial to measure and highlight areas where intervention might be necessary to reduce churn.

Churn rate formula

To calculate your churn rate, divide the number of customers who churned over a period of time by the number of customers you had at the start of that time frame.

Churn rate formula

What is a good churn rate?

A 'good' churn rate can vary depending on the app category and business model. Generally, a lower churn rate signifies better user retention, indicating that the app is generating more revenue from new and existing users than it is losing from churned users. This is vital for long-term success.

How to reduce churn rate?

By analyzing churn rate, app developers can determine whether changes are needed to retain customers. This may involve improving user experience (UX), optimizing features, offering personalized content, or adjusting prices. Churn rate benchmarks are influenced by your app's vertical, region, and operating system. Benchmarking against industry averages can offer valuable insights about your app's performance.

Remember that a churned user is not permanently lost. There are numerous strategies you can use to reduce churn.

Learn more about how to develop a user acquisition strategy that converts and how to increase user retention. To see how Adjust empowers mobile marketers to reduce churn and exceed KPIs, request a demo.

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