Churn – Churn Rate

Definition

Churn Rate indicates what percentage of customers or subscribers are lost within a specific period. For subscription-based business models, churn rate is one of the most important metrics as it directly affects CLV. A monthly churn rate of 5% means approximately 46% of customers are lost annually.

Formula

Example

A SaaS company has 1,000 customers at the start of the month and loses 30 during the month. The monthly churn rate is (30 / 1,000) × 100 = 3%. For SaaS, a monthly churn rate below 2% is considered good, below 1% is excellent.

Optimization Tips

Implement an onboarding program for new customers. Analyze churn patterns and identify at-risk customers early. Provide proactive support. Develop win-back campaigns for churned customers. Measure NPS regularly.