[GTM glossary](/glossary.txt) Churn rate

GTM Strategy & SaaS Metrics

# Churn rate

In short

Churn rate is the percentage of customers, or recurring revenue, lost during a specific period, such as a month or a year. It shows how quickly a business loses what it has already won.

For subscription companies, churn works against growth: every churned customer has to be replaced before the base grows at all.

## How to calculate churn rate

Always state the period. A 2% monthly churn compounds to a much larger annual loss.

* **Customer churn:** Customers lost in the period / customers at the start of the period.
* **Revenue churn:** Recurring revenue lost to cancellations and downgrades / recurring revenue at the start.
* **Example:** Say a company starts a month with 200 customers and 8 cancel. Monthly customer churn is 8 / 200 = 4%.

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## Types of churn

### Logo churn

Counts customers lost, regardless of size. See logo churn for details.

### Revenue churn

Weights losses by contract value, so one large cancellation counts more than several small ones.

### Voluntary and involuntary churn

Voluntary churn is a customer choosing to leave. Involuntary churn comes from failed payments or expired cards and is often the cheapest to fix.

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## How to reduce churn

* **Target better:** Selling to accounts that fit your ideal customer profile lowers churn before onboarding starts.
* **Improve onboarding:** Customers who reach first value quickly are more likely to stay.
* **Watch health signals:** Falling usage, champion departures, and unresolved tickets often come before cancellation.
* **Fix payment failures:** Retry logic and card-update reminders recover lost revenue.

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## Common mistakes

* **Using one blended number:** Segment by plan, size, and cohort to see where churn really sits.
* **Counting only cancellations:** Downgrades are revenue loss too; see contraction.
* **Looking too late:** By the time a customer cancels, the decision was usually made months earlier.

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## Churn rate FAQs

**What is churn rate?**

Churn rate is the percentage of customers or recurring revenue a business loses in a given period, such as a month or a year. It is calculated by dividing the amount lost by the amount at the start of the period.

**How do you calculate churn rate?**

Divide the number of customers lost during the period by the number you had at the start. For revenue churn, divide the recurring revenue lost to cancellations and downgrades by starting recurring revenue. Always state the time period used.

**What is the difference between customer churn rate and revenue churn rate?**

Customer churn counts how many accounts left, treating all equally. Revenue churn measures how much recurring revenue was lost, so large customers weigh more. A company can have low customer churn but high revenue churn if big accounts leave.

**How can you reduce churn rate in B2B SaaS?**

Sell to customers that fit your ideal profile, speed up onboarding, monitor usage and health signals, engage stakeholders beyond one champion, and recover failed payments. Segmenting churn by cohort shows which fix matters most.

Share term

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## More related phrases

* [Logo retention](/glossary/logo-retention.txt)
* [Retention rate](/glossary/retention-rate.txt)
* [Customer lifetime value](/glossary/customer-lifetime-value.txt)

## Similar phrases

* [Customer retention](/glossary/customer-retention.txt)  
Customer retention is a company’s ability to keep customers over time, measured by how many renew or continue buying during a given period.
* [Logo churn](/glossary/logo-churn.txt)  
Logo churn is the percentage of customers, counted by account rather than revenue, that cancel or do not renew during a given period.
* [Revenue churn](/glossary/revenue-churn.txt)  
Revenue churn is the share of recurring revenue lost in a period to cancellations and downgrades, shown as a percentage of revenue at the start of the period.
* [Churn risk](/glossary/churn-risk.txt)  
Churn risk is the likelihood that a customer will cancel or not renew, often judged from usage, engagement, support, and relationship signals.
* [Customer health score](/glossary/customer-health-score.txt)  
A customer health score is a single number or color rating that predicts whether an account will renew, expand, or churn, based on usage and relationship data.