2 Measuring Churn

 

This chapter covers

  • The precise definition of the Churn Rate
  • How to identify churned accounts and calculate the churn rate using SQL
  • What the Net Retention rate means
  • How to calculate Net Retention Rate with SQL
  • What Monthly Recurring Revenue (MRR) Churn means
  • How to calculate MRR Churn Rate with SQL
  • How to convert churn rates between monthly and annual measurements

You already have learned that the churn rate is a measurement of the proportion of customers that quit every month or year.  If you don't measure churn correctly, it's going to be that much harder to do anything about it. This chapter teaches you multiple definitions of churn that are suitable to different business scenarios and how to calculate them efficiently from a subscription database. In relation to the overall book scenario introduced in chapter 1, this chapter focuses on the process highlighted in Figure 2.1.

Figure 2.1 The place of Churn Measurement in the process of Fighting Churn With Data. The most common scenario for fighting churn is a product with subscribers, with the data for subscriptions and product events stored in the cloud. This chapter covers churn measurements or metrics.

2.1   The Definition of the Churn Rate

2.1.1   Calculating The Churn Rate and Retention Rate

2.1.2   The Relationship Between the Churn Rate and Retention Rate

2.2   Subscription Databases

2.3   Basic Churn Calculation: Net Retention

2.3.1   Net Retention Calculation

2.3.2   Net Retention Calculation SQL

2.3.3   Interpreting Net Retention

2.4   Standard Account Based Churn

2.4.1   Standard Churn Rate Definition

2.4.2   Outer Joins for Churn Calculation

2.4.3   Standard Churn Calculation SQL

2.5   Activity (Event) Based Churn for Non-Subscription products

2.5.1   Defining an Active Account and Churn from Events

2.5.2   Activity Churn Calculation SQL

2.6   Advanced Churn: Monthly Recurring Revenue (MRR) Churn

2.6.1   MRR Churn Definition and Calculation

2.6.2   MRR Churn Calculation SQL

2.8   Summary

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