Customer Attrition Rate

Definition

The rate at which a company's existing customers cease doing business with it over a given period, typically expressed as an annual percentage. Customer attrition rate is a critical input to the valuation of customer relationship intangible assets under both the multi-period excess earnings method and the distributor method. A higher attrition rate reduces the expected duration and value of the customer base, directly impacting the useful life assigned to the customer relationship intangible.