Churn Rate

Churn rate measures the percentage of customers (logo churn) or revenue (revenue churn) that a company loses over a period, typically monthly or annually. A 5% monthly churn rate means 5% of customers cancel each month. While that sounds modest, compounded over a year it means losing 46% of customers, which is devastating for most business models.

Revenue churn is generally more informative than logo churn because it accounts for the size of lost customers. Losing ten $100/month customers hurts less than losing one $5,000/month customer. Net revenue churn subtracts expansion revenue from existing customers: if a company churns $10K in revenue but existing customers expand by $15K, net revenue churn is negative 5%, which is excellent.

Churn benchmarks vary by market segment. B2B SaaS companies targeting SMBs typically see 3-7% monthly churn, while enterprise-focused companies target under 1% monthly. Consumer subscription businesses often see higher churn (5-15% monthly). Best-in-class SaaS companies achieve "negative net revenue churn," meaning expansion revenue from existing customers exceeds lost revenue from churned customers.