Churn Rate
Share of customers or revenue lost in a period.
Overview
Churn rate measures customer or revenue loss. It is the mirror of retention and a direct read on value and reliability gaps.
Churn rate is the share of customers or revenue lost during a period; the inverse of retention.
Definition
Separate voluntary cancellations from involuntary churn due to failed payments. Track logo churn versus revenue churn to understand mix effects.
Churn rate quantifies customer or revenue loss over a period. Separate voluntary cancellations from involuntary churn due to failed payments, and track logo churn versus revenue churn. Reducing churn often starts with better onboarding, clearer value, and billing reliability.
Formulas
Use start of period baselines.
Use start‑of‑period baselines for customers or MRR and compute lost share as a percentage.
Customer churn = lost customers / customers at start × 100% Revenue churn = MRR lost / MRR at start × 100%
Example
20 lost of 500 → 4% customer churn.
Show customer churn and revenue churn examples and explain why revenue churn is usually lower.
Common pitfalls
Counting upgrades as negative churn, mixing start and end baselines, and not isolating involuntary churn obscure the signal.
- Counting upgrades as negative churn
- Using end counts instead of start baselines
- Not separating involuntary churn
- Ignoring seasonality effects
Benchmarks
SMB customer churn 2–6% monthly is common; revenue churn typically lower (varies).
Ranges depend on segment; SMB customer churn often 2–6% monthly with revenue churn lower.
Notes
Track logo churn and revenue churn separately and implement dunning to reduce involuntary churn.
- Track logo churn and revenue churn separately
- Reduce involuntary churn with dunning and retry logic
Related terms
Churn complements NRR and retention and highlights onboarding and billing reliability work.
FAQs
FAQs ask about voluntary vs involuntary churn and the correct formulas to use.
Voluntary vs involuntary?
Track failed payments separately.