Why Modeling Churn is Difficult

Customer churn is a really interesting problem. It appears to be a simple calculation, but the more you explore it the more complex it becomes.

Source: blog.kissmetrics.com

For any metric you use to calculate churn, make sure you understand its limitations. The smaller the number of customers you have, the more likely month-to-month churn may appear to move up or down based solely on chance. If you have a large number of customers, measuring quarterly and annual churn rates can give very different results depending on how churn is calculated and how much the true rate of churn changes during the longer period. Despite answering a simple question, churn is a complicated metric.

Post your thoughts