Understanding the Churn Rate metric

Relevant to:

Churn Rate is the percentage of customers who cancel their subscriptions over a given period. Understanding your store’s Churn Rate can provide you with valuable insights into customer satisfaction, and is a helpful metric when planning for future growth.

Access the Churn Rate metric

Recharge provides two Churn Rates so you can better understand your customers' behaviours:

Subscribers: The total number of subscribers who churned during the reporting period. A subscriber is considered to have churned when they have no active subscriptions remaining.
Subscriptions: The total number of subscriptions that churned during the reporting period. A subscription is considered to have churned when it is no longer active.

The churn rate dynamically corresponds to the date range set within the filter. For example, if you entered the date range of October - December 2022, the Churn Rate metric provided is a quarterly churn rate, representing the percentage of customers who ended their subscriptions in that quarter.

Alternatively, if you enter the date range of October 2022, the Churn Rate metric would be a monthly churn rate, representing the percentage of customers who ended their subscriptions that month.

The Churn Rate is accessible in multiple places throughout the Recharge merchant portal:

Home analytics: View the subscriber and subscription Churn Rates when you log into the Recharge merchant portal.
Customer churn dashboard: View the Churn Rate at a subscriber level, plus additional subscriber-related churn metrics.
Subscription churn dashboard: View the Churn Rate at a subscription level, plus additional subscription-related churn metrics.

Home analytics

You can access both the Subscriber and Subscription Churn Rates from the Home Analytics:

Open the Recharge merchant portal.
Scroll down the Home Analytics page to the Churn section of the dashboard.
Toggle between the Subscriptions and Customers tabs to view the Churn Rates

Customer churn dashboard

Review the Customer churn dashboard to view data on the Subscriber Churn Rate:

Select Analytics in your merchant portal.
Select Dashboards and then Customers.
Open the Customer churn dashboard.
Set the data time period using the Filters option. Once you’ve selected the correct timeframe, press Apply to pull the relevant data.

Subscription churn dashboard

Review the Customer churn dashboard to view data on the Subscription Churn Rate:

Select Analytics in your merchant portal.
Select Dashboards and then Subscriptions.
Open the Subscription churn dashboard.
Set the data time period using the Filters option. Once you’ve selected the correct timeframe, press Apply to pull the relevant data.

Understand how the Churn Rate metric is calculated

Recharge gathers the following information before calculating the churn rate:

The total number of days in the specified period.
- This is specified using the filter function in the Revenue Trends dashboard.
The sum of all daily churned customers for the specified period.
- A customer is considered churned the day after the subscription is cancelled or expired. For example, if a customer cancelled their subscription on April 1st, 2022 they would be considered to have churned on April 2, 2022.
The sum of all daily total active customers for the specified time period.
- Since customer churn is identified the day after the customer’s subscription is cancelled, the number of daily customers is the total number of customers who were active on the previous day.

Recharge then takes those three values to calculate the churn rate using this formula:

number of days in the period × ( total number of churned customers in the specified time period ÷ total number of active customers in the specified time period ) × 100

This provides us with a churn rate that accurately reflects the percentage of customers that churned in a given time period.

Benefits of calculating churn with this formula

With this formula, Recharge considers the number of customers each day in the period, rather than only new customers, so the churn rate reflects the overall growth of the business.
Using historical data tracking, the total active customer count in the churn rate calculation is a sum of the total active customers at the beginning of each day in the time period. This normalizes your data so that it can be used to better assess your business’s growth and you can see a more robust churn rate, especially when looking across longer timeframes.
If Recharge were to calculate the total active customer count at the beginning, middle, or end of the timeframe, new customers may be missed. With this calculation, new customers are successfully accounted for.
Recharge also recognizes that new customer count should not directly affect the churn rate, as it can artificially inflate your data. Instead, our calculation focuses on each day within the time period to better account for new customer growth.
This model allows you to compare your churn rates to predict future churn. With this method, you can confidently rely on the churn rate percentage as an accurate forecasting tool.

Churned customers

A customer is considered churned when their customer status is inactive. The customer status may be inactive because the customer:

Actively churn: Either you or the customer cancelled the subscription, or the subscription expired after a set number of charges
Passively churn: The customer's order had an error, and the subscription was automatically marked inactive after the charge could not be successfully processed, even after retries

Customers are considered churned the day after their last active subscription is cancelled. For calculation purposes, churn is recorded on the first full day of inactivity. For instance, if a customer cancels on July 5th at 11:00 am, they are recorded as churned in our database on July 6th.

Considerations

Consider the following when reviewing the Churn Rate metric:

Consideration	Notes
Subscriber churn rate	The subscriber churn rate is calculated on the customer level, not the subscription level. This means a customer must be completely inactive to be considered churned. For example, if a customer had 2 subscriptions on January 1st, but cancelled 1 subscription on January 3rd, they would not be considered a churned customer. Similarly, if the customer cancelled their remaining subscription on January 3rd, but purchased a new subscription the same day, they would never be considered a churned customer.
Immediately expiring orders	If an order is set to expire immediately after one charge, the customer is not considered to have churned, and are excluded from the churn rate calculations.
Subscription frequency	Recharge uses all customer and subscription purchase data to calculate churn, but does not separate churn by subscription frequency. Recharge recommends accounting for the subscription frequency when calculating your churn rate. For example, if you have a quarterly subscription, you should set your date filter to reflect a quarterly churn rate instead.
Prepaid subscriptions	Prepaid subscriptions are considered churned on the last prepaid charge. For example, if a customer purchased an annual subscription on January 1st, but cancelled their prepaid subscription on February 14th, Recharge would not wait until the last shipment on December 1st to consider the customer as churned. Instead, the customer’s status as churned would take effect after their last charge, which was January 1st. If the prepaid subscription is set to expire after one charge, then the customer is excluded from the churn calculations altogether.

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