Why is it helpful to know the churn rate?

Question

In the context of this exercise, why is it helpful to know the churn rate?

Answer

Churn rate is helpful mainly because it tells a business or service how many users or subscribers have canceled over a specific period of time. By knowing this, they can determine the reasons why users might have canceled, possibly due to some new feature or change in the service that may have caused people to leave. Companies want to stay profitable and to do so, they need to make sure that the rate of growth is greater than the churn rate. By determining the possible causes of customer churn, companies can react and make improvements to their service. In addition, another motivation is that reducing churn rate means increasing loyalty since more customers are continuing with the service for longer.

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