Customer Churn Rate

What is Customer Churn Rate?

Customer Churn Rate (also called Logo Churn or Customer Attrition Rate) is the percentage of customers who stop doing business with you during a specific time period. It's one of the most critical metrics for subscription and SaaS businesses.

Churn can be voluntary (customer chooses to leave) or involuntary (failed payments, business closure). Most companies focus on reducing voluntary churn since it's within their control.

How to Calculate Churn Rate

Customer Churn Rate Formula:

Churn Rate (%) = (Customers Lost During Period ÷ Customers at Start of Period) × 100

Example:

Starting customers: 1,000
Lost customers: 50

Churn Rate = 50 ÷ 1,000 × 100 = 5%

Types of Churn

• Customer/Logo Churn: Number of customers lost
• Revenue Churn: Dollar value of lost recurring revenue
• Gross Churn: Total revenue lost (before expansion)
• Net Churn: Revenue lost minus expansion revenue

Churn Benchmarks

• Enterprise SaaS: 5-10% annual logo churn
• Mid-market: 10-20% annual logo churn
• SMB: 3-5% monthly logo churn is acceptable

Common Causes of Churn

• Poor onboarding and time-to-value
• Lack of product adoption
• Unmet customer expectations
• Champion departure
• Competitor displacement
• Budget cuts or business changes