Little Glossary · Go-to-market
Churn
Churn, or churn rate, is the percentage of customers or recurring revenue a subscription business loses over a period. It's the metric that tells you whether the business keeps what it acquires.
Two ways to measure it
- Customer churn (logo churn): customers lost in the period divided by customers at the start. If you start the month with 200 and 6 leave, monthly churn is 3%.
- Revenue churn: recurring revenue lost to cancellations and downgrades, divided by recurring revenue at the start.
They tell different stories: losing many small customers may barely dent revenue, while losing one large account can sink the month.
Related metrics
- Gross revenue retention (GRR): the share of revenue kept from existing customers, excluding expansion. It never exceeds 100%.
- Net revenue retention (NRR): the same, adding expansion and upsells. Above 100% means the existing base grows even if no new customers come in.
Monthly vs annual
A monthly churn rate that looks small compounds: 2% a month means losing about 21.5% of customers in a year (1 − 0.98¹²). Always state the period when comparing figures.
Voluntary and involuntary
- Voluntary: the customer decides to cancel because of price, lack of use, a competitor or an internal change.
- Involuntary: failed payments or expired cards. Reduced with reminders and payment retries.
What's usually behind it
- Onboarding that doesn't get the customer to a first result.
- Customers outside the ICP, signed because any sale looked good.
- Expectations inflated by the website or sales that the product doesn't meet.
- Low usage nobody spotted in time.
Related terms
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