marketing
Churn Rate
Percentage of customers who leave in a given period. The silent killer of recurring revenue.
Definition
Churn rate is customers lost in a period divided by customers at the start of the period. 5% monthly churn means losing 5% of customers every month - which compounds to ~46% annual churn. The math is brutal: a SaaS at 5% monthly churn cannot grow no matter how much it spends on acquisition. Healthy benchmarks: SMB SaaS 3-5% monthly, mid-market 1-2%, enterprise under 1%. Service retainers should target under 10% annual churn.
In your business
- →Track monthly churn for subscriptions, annual churn for retainers
- →Segment churn by customer cohort - new customers often churn faster than mature ones
- →Exit-interview every churn - patterns emerge fast