sales
Churn Rate (SaaS)
Subscription cancellation rate in a SaaS business. The metric that decides whether you can grow.
Definition
SaaS churn is measured two ways: logo churn (% of customers lost) and revenue churn (% of MRR lost). For SMB SaaS, 3-5% monthly churn is typical; mid-market 1-2%; enterprise under 1%. The math is brutal: at 5% monthly churn, you lose ~46% of your customer base every year, and growth gets harder every year. Reducing churn is the single highest-leverage activity in any subscription business. Negative net revenue churn (expansion exceeds churn) is the SaaS holy grail.
In your business
- →Track logo churn and revenue churn separately - they diverge in informative ways
- →Cohort by signup month - new cohorts often churn faster than mature ones
- →Build customer success before you scale acquisition - acquisition into a leaky bucket wastes money