Churn Rate
The percentage of customers who stop using your product or cancel their subscription in a given period.
Why It Matters
Even small improvements in churn dramatically impact revenue; reducing churn by 5% can increase profits by 25-95%.
How It Works
Divide the number of customers lost during a period by the number at the start of that period. Logo churn counts customers lost; revenue churn accounts for the dollar value, which can differ significantly if larger accounts are churning.
Real-World Example
A SaaS company starting the month with 1,000 customers and losing 30 has a 3% monthly churn rate.
Common Mistakes
Only tracking logo churn and ignoring revenue churn
Not segmenting churn by cohort or customer type
Related Terms
The percentage of recurring revenue retained from existing customers after accounting for churn, downgrades, and expansion.
The total revenue a business can expect from a single customer account throughout their entire relationship.
The ratio of customer lifetime value to customer acquisition cost, indicating the return on acquisition investment.
Churn Rate FAQs
What is a good churn rate?
For B2B SaaS, 3-5% annual churn is excellent; for B2C subscriptions, 5-7% monthly churn is typical.
How do I reduce churn?
Improve onboarding, monitor engagement health scores, proactively reach at-risk accounts, and continuously deliver product value.
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