Churn Rate is the percentage of customers or subscribers who cancel or fail to renew their relationship with a business during a given timeframe. It’s a key indicator of customer retention and overall business health.
To calculate Churn Rate, divide the number of customers lost during a specific time period by the number of customers you had at the beginning of that period. Multiply by 100 to express it as a percentage.
Churn Rate (%) = (Customers Lost ÷ Customers at Start of Period) × 100
Churn Rate (%) = (Customers Lost ÷ Customers at Start of Period) × 100
If your company started the month with 1,000 customers and lost 50 by the end of the month, your Churn Rate would be 5%. This means 5% of your customer base left during that time.
A good Churn Rate varies by industry. In SaaS, 5% monthly or less is often considered healthy. Lower churn means higher retention, increased customer value, and greater revenue stability.
A Churn Rate above 10% per month typically signals serious retention problems. It suggests that customers aren’t finding ongoing value, which undermines growth and profitability.
Help customers quickly understand and get value from your product or service to reduce early churn.
Regularly survey users and respond to issues to show customers you’re listening and improving.
Use behavioral data to spot inactivity or declining usage and proactively reach out to re-engage.
