SaaS

    Churn Rate

    The percentage of customers who stop doing business with a company during a given time period.

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    Key Takeaways

    • Even 5% monthly churn compounds to losing 46% of customers annually. Small churn improvements have massive impact.
    • Revenue churn matters more than customer churn: losing a $100K account is worse than losing ten $1K accounts.
    • Negative net churn (expansion exceeds losses) is the gold standard, meaning you grow even without new customers.

    Types of Churn and How to Measure Them

    Churn TypeFormulaWhat It Reveals
    Customer churnLost customers / Starting customersRetention effectiveness
    Revenue churn (gross)Lost MRR / Starting MRRRevenue impact of attrition
    Net revenue churn(Lost MRR - Expansion MRR) / Starting MRROverall revenue health
    Logo churnLost accounts / Starting accountsAccount retention regardless of size

    Track all four metrics. A company can have acceptable logo churn but dangerous revenue churn if large accounts are leaving. Conversely, low revenue churn can mask high logo churn if small accounts leave while large ones expand.

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