What is Churn Rate, and how do you calculate it?
In short – Percentage of customers who stop using the marketplace over a period. A key marketplace metrics you should track.
Churn Rate Formula
Churn Rate = (Customers Lost During Period ÷ Total Customers at Start of Period) × 100%
Churn Rate indicates the rate at which customers discontinue their relationship with the marketplace. It is the opposite of retention rate.
High churn rates can signal issues with customer satisfaction, product quality, or competition. Identifying and reducing churn is essential for maintaining revenue streams.
How can you find your Churn Rate?
You should generally be able to calculate your Churn Rate with tools you already posess. If that's not the case, signing up for an analytics tool may make sense.
Among others, twosided is one of the tools you could consider. Out-of-the-box, you'll get over two dozens marketplace KPIs and detailed tracking for your supply, demand and other factors that determine marketplace health.
Explore other metrics
Order Frequency
Average number of orders placed by a buyer within a specific period
Cross-Sell Rate
Percentage of transactions that include additional products or services
Supply-Demand Ratio
Ratio of available listings to active buyers
Listing Quality Score
A metric evaluating the quality of product listings based on predefined criteria
User Net Adds
Net increase in the number of users over a specific period