Churn Rate

What Is Churn Rate?

Churn rate measures how many customers leave during a given period (usually monthly or annually). Calculate by dividing customers lost by customers at period start. A 5% monthly churn means 5% of customers leave each month. Low churn indicates customers are satisfied and sticky; high churn indicates problems: product doesn't meet needs, competition is better, or onboarding is poor.

Churn is the silent killer of SaaS businesses. Even with strong new customer acquisition, high churn is unsustainable: you're filling a leaky bucket. Reducing churn by 1% dramatically improves lifetime value and business trajectory. Customer success teams often focus entirely on churn reduction: ensuring customers get value and removing friction.

Churn analysis reveals patterns: which customer segments churn (price-sensitive customers churn more), why they churn (survey early churners), when they churn (after specific triggers—lack of usage, unmet needs). Understanding churn drivers enables targeted retention strategies. Products with strong product-market fit have churn under 5% monthly; healthy products are under 10%; struggling products exceed 15%.