Churn Rate
The percentage of customers who cancel their subscription in a given period. It tells you how leaky the bucket is before you pour more marketing budget into it.
Churn rate (or customer attrition) is the percentage of customers or subscribers who cancel or fail to renew their subscription over a specified timeframe (monthly or annually).
Calculating Churn
Customer Churn is calculated by dividing the number of customers lost during a period by the total number of active customers at the start of that period:
Customer Churn Rate = (Lost Customers / Starting Customers) × 100%
Customer Churn vs. Revenue Churn
- Logo Churn: The raw count of accounts lost, regardless of contract size.
- Net Revenue Churn: The percentage of recurring revenue lost after accounting for upgrades, upsells, and expansions from surviving accounts.
Sustainable growth requires keeping churn low enough that net revenue retention (NRR) remains comfortably above 100%.