Definition
Churn rate is the percent of customers who stop paying or stop using a product during a set time, such as a month.
The basic formula is the number of customers lost during the period, divided by the number at the start, times 100. Only count people who were customers at the start. New sign-ups during the month go into next month's math.
There are a few kinds. Customer churn counts people. Revenue churn counts money, so losing a big customer weighs more. You can also track churn by plan, or by how long people have been customers.
Why it matters
For a subscription app or SaaS, churn decides how fast you can grow. If you lose customers as fast as you win them, you stay flat. Feedback from people who leave tells you which reasons you can fix.
Example
You start March with 400 paying users. During March, 20 of them cancel. Your churn rate for March is 20 ÷ 400 × 100 = 5%.
Related terms
- Retention rate Retention rate is the share of users who are still active, or still paying, after a set time.
- Net Promoter Score (NPS) Net Promoter Score (NPS) measures loyalty by asking how likely people are to recommend you, on a 0 to 10 scale.
- Customer feedback loop A customer feedback loop is the cycle of hearing feedback, acting on it, and telling people what changed.
- Voice of the customer (VoC) Voice of the customer (VoC) means gathering what customers say, in their own words, and using it to guide your choices.
Learn more
Updated by the Synthiya team. See all terms.