What term describes the measurement of customers ceasing to use a company's products?

The term that describes the measurement of customers ceasing to use a company's products is known as churn rate. This metric specifically quantifies the percentage of customers who stop engaging with a service or stop buying products over a given period of time. Understanding churn rate is crucial for businesses because it directly affects revenue and profitability; a high churn rate indicates that a company is losing customers faster than it can acquire new ones, which can lead to long-term sustainability issues.

In contrast, switching costs refer to the expenses or inconveniences incurred by a customer when changing from one product or service to another. Customer Lifetime Value (CLTV) is a metric that estimates the total revenue a business can expect from a single customer account throughout the business relationship. Switching rate, while it may sound similar to churn rate, typically measures how often customers move between different products or providers, rather than the rate at which existing customers are leaving.

Churn rate provides insights into customer satisfaction and loyalty, making it a critical metric for businesses aiming to improve retention strategies.