Churn is a term used to describe the rate at which customers are leaving a product or service. In other words, it's the number of customers who stop using your product or service over a period of time. It's one of the most important metrics for SaaS companies, because it shows how quickly you're losing customers and whether or not you're retaining them. In the context of subscription businesses, it's also referred to as "cancellations" or "attrition". It's a metric that's closely watched by CEOs and investors alike, because it directly impacts a company's revenue.
There are two types of churn a subscription business should be measuring the rates of, and acting upon:
Customer churn Rate
Customer churn rate = ( Customers who cancel / Total number of customers at beginning of time period) * 100
Learn more about customer churn rate.
Revenue churn rate
Revenue churn rate = (Sum of MRR for Lost customers.) * 100
Learn more about revenue churn rate .
Frequently asked questions
Have another question? Reach out to our retention expert team.
- What does churn mean in business?
- In business churn is the percentage of customers who stop using your product or service over a period of time. It's a measure of customer retention—the more customers that churn, the lower your company's customer retention rate.
- How can I reduce my MRR churn?
There are a number of things you can do to reduce your MRR churn rate, including:
- Improving the onboarding experience for new customers
- Offering more value for the price
- Proactively reaching out to at-risk customers
- Surveying customers to find out why they leave
- Offering customers incentives to stay
- What's a good MRR churn amount?
- It depends on your business. But generally speaking, an MRR churn amount that equates to an Revenue churn rate of 5% or less is considered good.
- What's the difference between customer churn and MRR churn?
- Customer churn is the amount of customers that are lost in a given period of time. MRR churn is the amount of monthly recurring revenue that's lost due to cancellations or downgrades in a given period of time.
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