Use the same period for both figures below.
How many active customers you had on day one of the period.
Customers who cancelled or stopped buying before the period ended.
Churn tells you how fast customers leave. What they were worth before they left is the other half of the picture, and the customer lifetime value calculator works that out.
See how Mage helps Shopify brands lift repeat purchase rate with loyalty, referrals and store credit.
Churn rate is the percentage of customers you lose over a set period. It is the mirror image of retention rate: if 5% of your customers leave in a month, 95% stayed. Churn is the single clearest measure of whether a business keeps the customers it works so hard to win.
Divide the customers lost during the period by the customers you had at the start of it, then multiply by 100. Start a month with 1,000 customers and lose 50, and the sum is 50 divided by 1,000, times 100, which is a 5% monthly churn rate. Retention rate is simply 100 minus that, so 95%.
For a subscription business it is straightforward: a cancellation or a failed renewal. For an ecommerce store there is no cancel button, so you have to define a lapse window, commonly a customer who has not ordered in 90, 180 or 365 days depending on how often people normally buy from you. Pick one definition and keep it consistent, because changing it mid-year makes your trend meaningless.
No. Churn measures what happens to the customers you already had, so the denominator is your starting count and new signups during the period are excluded. Including them inflates the base and makes churn look artificially low. If you want to know whether the business is growing overall, track net customer growth separately.
Customer churn counts people; revenue churn counts money. Lose ten small customers and one large one and your customer churn looks bad while revenue churn may barely move, or the reverse. Revenue churn can even go negative when upgrades from remaining customers outweigh what leavers took with them, which is why subscription businesses watch both numbers side by side.
It depends heavily on the model. Established SaaS businesses selling to companies often run 1% or lower monthly, while consumer subscriptions typically sit around 5% to 7%. Ecommerce is different again, because most stores lose the majority of first-time buyers and a repeat purchase rate of 20% to 30% is considered solid. Compare yourself to your own last quarter before comparing yourself to a benchmark.
Divide 1 by your churn rate expressed as a decimal. A 5% monthly churn rate is 0.05, and 1 divided by 0.05 is 20, so the average customer stays 20 months. At 10% monthly churn that halves to 10 months. It is an estimate rather than a promise, because it assumes churn stays flat, but it is the fastest way to see what your churn rate is really costing you.
Use the survival rate, not multiplication. Take 1 minus the monthly churn as a decimal, raise it to the power of 12, then subtract that from 1. For 5% monthly: 0.95 to the power of 12 is 0.5404, so annual churn is about 45.96%, not the 60% you would get by multiplying 5 by 12.
Because each month churns a smaller base than the one before. Once 5% have gone, next month's 5% applies to the 95% who remain, so the losses compound downward instead of stacking in a straight line. Multiplying also breaks completely above roughly 8.33% monthly, where it returns a churn rate over 100%, which is impossible.
Mixing periods, so spend or losses from one window are compared against customers from another. Adding new customers into the starting count. Quietly changing the lapse window that defines a churned ecommerce customer. And treating a single month as a trend when seasonality, a payment processor outage or one big account can move the number on its own.
Voluntary churn is a customer choosing to leave. Involuntary churn is a customer who wanted to stay but was dropped anyway, usually by an expired card or a failed payment. Involuntary churn is frequently 20% to 40% of all churn and it is the cheapest to fix, since card updater services and dunning emails recover much of it without any change to the product.
Fix involuntary churn first, then work on the early weeks, since most customers who leave do so before they ever get value. Reach out to accounts showing warning signs such as falling order frequency, make cancelling feel like a loss by building up something worth keeping, and give people a reason to come back on a schedule. Small gains compound: cutting monthly churn from 6% to 4% lifts average customer lifespan from about 17 months to 25.
A loyalty program gives customers a reason to return that is not a discount, and a balance they lose by shopping elsewhere. Points, tiers and store credit all raise the cost of leaving, while referrals bring in customers who already trust the brand and tend to stay longer. Retention compounds: every point of churn you remove lengthens the average lifespan and lifts lifetime value without spending another cent on acquisition.
Yes. No signup, no email, and no limit on how many periods you run through it. It is built by Mage Loyalty, a loyalty, referrals and store credit app for Shopify.
Mage is a loyalty, referral and store credit app built for Shopify. Reward repeat purchases, run VIP tiers, and give customers a reason to come back, without writing a line of code.
