Glossary · Conversion & retention

What is churn rate?

Churn rate is the percentage of customers (or recurring revenue) that a business loses during a period, out of the customers (or revenue) it had at the start of that period.

Also called: Customer churn, Attrition rate

Updated

How is churn rate calculated?

Customer churn rate = customers lost in period ÷ customers at start of period × 100
Gross revenue churn = MRR lost to cancellations and downgrades ÷ MRR at start × 100

Customer (logo) churn counts accounts; revenue churn weights them by what they paid. Monthly churn doesn't convert to annual by multiplying by 12 — it compounds: annual retention = (1 − monthly churn)¹².

Churn rate example

You start March with 500 customers and $15,000 MRR. During March, 20 customers cancel ($500 MRR) and 5 downgrade ($150 MRR). Customer churn = 20 ÷ 500 = 4%. Gross revenue churn = $650 ÷ $15,000 = 4.3%. At 4% monthly customer churn you keep (0.96)¹² ≈ 61% of a cohort after a year — annual churn of about 39%, not 48%. Try it in the churn rate calculator.

Why churn rate matters

Churn sets the ceiling on growth: at some point new customers only replace lost ones. It also drives customer lifetime value — a simple approximation of average customer lifetime is 1 ÷ monthly churn, so 4% churn means about 25 months.

Common churn pitfalls

  • Counting new customers who also churned in the same month inconsistently.
  • Annualizing by multiplication instead of compounding.
  • Ignoring involuntary churn — failed card payments are often a large share and the easiest to fix.
  • Averaging across plans. Monthly-plan churn and annual-plan churn are different businesses.
  • Blaming the product for acquisition problems. Customers from a poorly matched channel churn faster.

How VisitTrack relates to churn

VisitTrack doesn't calculate subscription churn — your billing system owns that. What it adds is the acquisition side: each payment is attributed to the visitor's first-touch referrer, campaign and landing page, and refunds subtract automatically, so you can compare which channels bring customers who keep paying and which bring ones who refund or leave. See revenue attribution.

Frequently asked questions

What is a good churn rate?

Lower is better, and acceptable levels depend on the market: low-priced self-serve products typically churn faster than products sold to larger companies on annual contracts. Track it by plan and cohort rather than against a single benchmark.

What is the difference between customer churn and revenue churn?

Customer churn counts how many accounts you lost. Revenue churn measures how much recurring revenue you lost, including downgrades, so losing a few large customers can hurt revenue churn far more than customer churn.

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