← Glossary Business

Churn

The rate at which customers or revenue leaves your business. Lower is better.

Explained simply.

Churn is the leakage. Customer churn = % of customers who cancel in a period. Revenue churn = % of revenue lost in a period (different from customer churn when customers downgrade). Track both, because they tell different stories. Losing one big customer and keeping many small ones looks fine by customer churn but terrible by revenue churn.

An example.

Month starts with 1,000 customers; 30 cancel. Customer churn = 3% monthly, 36% annualized. Most SaaS aims for <5% annual for enterprise, 3-7% monthly for SMB. If your churn is higher, your product, your target market, or both need rethinking.

Why it matters.

Churn is the tax on every growth effort. High churn eats new acquisition. Unchecked churn kills businesses quietly; you grow through a valley and don't notice until revenue flatlines. Measure monthly. Investigate every cancel.