What is Churn Rate?
Churn rate measures the share of customers, subscriptions, or revenue lost during a period. Customer churn counts logos lost; revenue churn measures dollars lost. Net revenue churn accounts for expansion from existing customers, and can even be negative (a great sign) when upsells outweigh losses.
Churn is one of the most important health metrics for subscription and SaaS products because it compounds: high churn means you must acquire customers just to stand still, capping growth no matter how strong acquisition is. Even a few points of monthly churn dramatically erode a customer base over a year.
PMs attack churn by understanding why it happens — poor onboarding, missing value, bugs, or a better competitor — often through cohort analysis and exit surveys. Reducing churn is frequently higher-leverage than adding new acquisition.
Examples
- A SaaS product with 5% monthly churn loses nearly half its customers over a year without replacement.
- A PM traces churn spikes to a confusing onboarding step using cohort analysis, then fixes activation.
Where PMs use this
Related terms
Retention
The degree to which users keep coming back to a product over time — the foundation of sustainable growth.
Customer Lifetime Value (LTV)
The total revenue (or profit) a business expects to earn from a customer over the entire relationship.
Cohort Analysis
Grouping users by a shared trait (often signup date) to compare how their behavior evolves over time.
ARR / MRR
Recurring revenue normalized to an annual (ARR) or monthly (MRR) figure — the core SaaS revenue metric.