Churn Rate
The percentage of customers or revenue lost over a given period. Customer churn measures account losses; revenue churn measures dollar losses.
Also known as: attrition rate, customer churn
Formula
(Customers Lost / Customers at Start) x 100
Why churn rate matters
Churn is the silent killer of subscription businesses. Even small increases in churn rate compound dramatically over time, requiring exponentially more new customer acquisition to maintain growth.
A 5% monthly churn rate means you lose nearly half your customer base every year. Reducing churn from 5% to 3% can double the lifetime value of your customer base. This is why churn reduction often delivers better ROI than acquisition optimization.
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How to calculate churn rate
Divide the number of customers lost during a period by the number of customers at the start of that period, then multiply by 100. For revenue churn, use MRR lost instead of customer count. Be consistent about whether you count customers who joined and left within the same period.
Customer Churn Rate Calculator
(Customers Lost / Customers at Start) x 100
Churn Rate examples
A project management tool with 2,000 customers loses 60 per month. Their 3% monthly churn means they need 720 new customers per year just to stay flat.
Benchmark: 2-5% monthly for SMB SaaS, 0.5-1% for enterprise
A subscription box service tracks churn by box number. They find 25% churn after box 1 but only 5% after box 6, revealing an activation problem rather than a product problem.
Benchmark: 5-10% monthly for subscription boxes
What is a good churn rate?
Best-in-class SaaS companies achieve less than 2% monthly customer churn. Enterprise SaaS typically sees 0.5-1% monthly churn. SMB-focused products often see 3-7% monthly churn. Negative net revenue churn (expansion exceeds churn) is the gold standard.
How to Track in Kissmetrics
Use Kissmetrics to track cancellation events with properties for reason, plan type, tenure, and last activity date. Build a Cohort Report to see churn rates by signup month. The People Search lets you identify at-risk users based on declining engagement patterns.
Common Mistakes
- -Mixing voluntary and involuntary churn (failed payments) without separating them
- -Not segmenting churn by customer cohort, plan, or acquisition source
- -Measuring churn only at cancellation rather than tracking leading indicators of disengagement
- -Ignoring logo churn because revenue churn looks healthy due to expansion in remaining accounts
Pro Tips
- +Segment churn by customer tenure - most churn happens in the first 90 days
- +Track leading indicators like login frequency and feature usage drops before cancellation
- +Implement a cancellation flow that captures reasons and offers alternatives like a plan pause
- +Compare voluntary churn (customer decision) vs involuntary churn (payment failure) separately
Related Terms
Customer Retention Rate
Customer retention rate is the percentage of existing customers who remain active and continue purchasing over a specific time period. It measures a business's ability to keep customers coming back.
Net Dollar Retention (NDR)
The percentage of recurring revenue retained from existing customers after accounting for expansion, contraction, and churn. Above 100% means existing customers generate more revenue over time.
Revenue Churn
Revenue churn (also called MRR churn) is the percentage of recurring revenue lost from existing customers in a given period due to cancellations and downgrades. It measures the rate at which your revenue base erodes.
Customer Lifetime Value
Customer Lifetime Value (CLV or LTV) is the total revenue a business can expect from a single customer over the entire duration of their relationship. It is the most important metric for understanding long-term customer profitability.
Further Reading
What Is Customer Churn? Definition, Calculation, and Prevention Strategies
Customer churn is the share of customers who stop paying in a period. The formula, voluntary vs involuntary churn, industry benchmarks, and how to reduce it.
Why Churn Is Harder to Model Than It Looks
Cancellations over customers is not a property of your retention; it is retention and recent acquisition mixed together.
SaaS Churn: How to Diagnose, Measure, and Fix Your Retention Problem
SaaS churn analytics from rate to root cause: how to calculate churn, read cohorts, spot leading indicators, and the retention fixes with measured effect.
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