How is churn rate calculated?

We use the distribution of days between orders (when there is a next order) to determine churn rate. By default, the 80th percentile marks the cutoff for churned customers and the 40th percentile puts a customer at risk.

Based on this distribution, we assume any customer who hasn't ordered within 120 days has churned. However, this may not be reflective of your brand's specific customer behavior, so you can adjust that setting to a different number of days.

You may want to change this number depending on your customers' expected purchase cycle. For example:

• Consumable products with short replenishment cycles (e.g., coffee, cosmetics) might need a shorter churn window
• Durable goods with longer replacement cycles (e.g., appliances, high-end apparel) might need a longer churn window

Adjusting this setting to match your business model will ensure more accurate customer lifecycle reporting and more effective targeting for retention campaigns.