Revenue & RetentionChurn Rate

Customer Churn Rate

Customer churn rate measures the percentage of customers who cancel or stop using your product over a specific time period.

Key Takeaways
  • Customer churn rate is the percentage of customers lost during a period, calculated by dividing churned customers by the starting customer count.
  • Common Mistakes:
  • Including new customers in the denominator (use starting count only).
  • Confusing customer churn with revenue churn (losing 10% of customers may be different from losing 10% of revenue).
  • Not annualizing monthly churn rates correctly (annual churn ≠ monthly churn × 12).
  • Ignoring involuntary churn from failed payments.
  • Calculating churn over inconsistent or very short time periods.
  • Not segmenting churn by customer type, leading to misleading averages.

Definition

Customer churn rate is the percentage of customers lost during a period, calculated by dividing churned customers by the starting customer count.

Low churn (< 5%)

Strong product-market fit and customer satisfaction.

Moderate churn (5-10%)

Typical for many SaaS businesses; room for improvement.

High churn (> 10%)

Significant retention issues; impacts growth and profitability.

Formula

Churn Rate (%) = Customers Lost / Customers at Start of Period × 100

Variables

Customers Lost

Number of customers who canceled during the period.

Starting Customers

Total customers at the beginning of the period.

Examples

Monthly customer churn

MetricCount
Customers at start of month500
New customers added50
Customers lost (churned)25
Customers at end of month525
  1. 1Use starting customer count: 500
  2. 2Customers lost: 25
  3. 3Churn rate = 25 / 500 × 100 = 5%
→ Monthly churn rate = 5%

Track in Daymark

Data Sources

CSVgoogle sheetspostgreSQL

Required Fields

Customer status by period
  • customer_id
  • signup_date
  • cancellation_date
  • status

Sample Questions

  • What is the monthly customer churn rate?
  • Show churn rate trend over the last year
  • Calculate churn rate by customer segment or plan
  • What's our churn rate for customers in their first 90 days?
  • Compare churn rate across acquisition channels
  • Show churn reasons breakdown
  • Identify customers at high risk of churning
Analyze churn

Dashboard Template

1. line
Churn rate over time

Monthly churn rate trend

2. heatmap
Churn by cohort

When customers churn by signup month

3. pie
Churn reasons

Why customers cancel

4. table
At-risk customers

Customers with churn signals

Common Mistakes

  • •Including new customers in the denominator (use starting count only).
  • •Confusing customer churn with revenue churn (losing 10% of customers may be different from losing 10% of revenue).
  • •Not annualizing monthly churn rates correctly (annual churn ≠ monthly churn × 12).
  • •Ignoring involuntary churn from failed payments.
  • •Calculating churn over inconsistent or very short time periods.
  • •Not segmenting churn by customer type, leading to misleading averages.

FAQ

Q: What's the difference between customer churn and revenue churn?

Customer churn counts lost customers; revenue churn measures lost revenue. High-value customer churn impacts revenue more.

Q: How do I calculate annual churn from monthly churn?

Use: Annual churn = 1 − (1 − monthly churn)^12. Don't just multiply monthly by 12.

Q: Should I track voluntary vs involuntary churn separately?

Yes. Involuntary churn (failed payments) often has different solutions than voluntary cancellations.

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