Churn Rate

Business Finance

Churn rate is the percentage of customers (or revenue) lost over a period. Customer churn = customers lost / customers at start. Revenue churn = revenue lost / revenue at start. Monthly churn of 3% sounds small but compounds to 30% annually — a third of customers gone yearly. SaaS benchmarks: under 1% monthly churn is excellent; 1-3% is acceptable; 5%+ indicates serious product or fit issues. Net churn factors in expansion revenue — negative net churn means existing customers grow faster than they cancel. Reducing churn (improving retention) is typically the highest-leverage growth lever, more impactful than increasing acquisition.