For example, if a company with 10 million subscribers loses 1% per month, it is losing 100,000 subscribers monthly to the competition. But if a larger competitor with 40 million subscribers has a churn rate of 0.5%, it's losing 200,000 subscribers each month to the competition. Overall, the smaller competitor is gaining ground despite having a higher churn rate.
So, a good churn rate for a mature competitor is likely much lower than one for a newer, smaller competitor that's actively gaining market share. One is playing defense, trying to keep as many customers as possible, while the other is playing offense and trying to attract as many new customers as possible.
Investors will likely want to see improvements in churn rates over time. So comparing a company's churn rate from the same period a year ago or two years ago can provide insight into whether their churn rate is good. If churn increases but the competitors' churn rates remain stable, it may signal a problem.
Understanding the industry you're analyzing can give you great insight into the effects of churn on a company and its competitors and vice versa.
