Churn Rate

Churn rate—also known as customer attrition rate—measures the proportion of customers lost over a specific period. For subscription businesses, this usually means the percentage of subscribers who cancelled. For non-subscription businesses, it may mean the percentage of customers who did not make a repeat purchase within a defined window.

Churn is the inverse of retention: if your monthly churn rate is 5%, your monthly retention rate is 95%. Even small reductions in churn compound dramatically over time. A SaaS company that reduces monthly churn from 5% to 4% will retain roughly 20% more customers over a year.

Tracking churn alone is not enough. You should segment it by cohort, plan tier, acquisition channel, and customer size to uncover patterns. Voluntary churn (the customer chose to leave) and involuntary churn (payment failure, expired credit card) require different interventions.

Leading indicators of churn include declining product usage, poor NPS or CSAT scores, and increased support ticket volume. Proactive outreach to at-risk customers can significantly reduce churn before it happens.