Churn Rate.

Churn rate is the percentage of customers (logo churn) or recurring revenue (revenue churn) that a subscription business loses in a given period, typically measured monthly or annually. High churn signals product, market fit, or customer success problems; low churn is a prerequisite for efficient SaaS growth.

Calculating Churn

Monthly logo churn = customers lost in the month ÷ customers at the start of the month. Monthly revenue churn = MRR lost in the month ÷ MRR at the start of the month. A 3% monthly logo churn rate annualises to ~32% — meaning one in three customers is lost each year, which is unsustainably high for most SaaS models.

Voluntary vs. Involuntary Churn

Voluntary churn occurs when customers actively cancel because the product isn't delivering value. Involuntary churn (also called passive or delinquent churn) occurs when payments fail due to expired credit cards or insufficient funds. Involuntary churn, often 20-40% of total churn, can be largely recovered through dunning emails, retry logic, and account updater services.

Leading vs. Lagging Indicator

Churn is a lagging indicator — it reports what already happened. Leading indicators of future churn include declining login frequency, unused core features, unresolved support tickets, and dropping NPS scores. Customer success teams use these signals to intervene before cancellation. Health score models quantify these signals into a single risk score per account.