Churn Rate

Churn rate is a critical health metric for subscription businesses because losing customers directly impacts recurring revenue. It is typically calculated monthly or annually by dividing the number of lost customers by the total customer count at the start of the period. High churn often signals product-market fit issues, poor customer experience, or ineffective onboarding. Reducing churn by even a few percentage points can dramatically improve profitability. For buyers, churn and retention metrics reveal vendor health: strong renewal rates and expansion revenue indicate products that improve for customers, while high churn signals value erosion. Reviewing cohort behavior identifies the root causes worth fixing, whether onboarding friction or feature gaps.