Churn

The rate at which customers or revenue leave over a period.

Example

Starting the month with 100 customers and losing 5 is 5% monthly customer churn.

Important

5% monthly churn means you replace your entire customer base in under two years. High churn makes growth feel like running up a descending escalator.

Related terms

  • Retention — The share of customers still active after a given period. The inverse of churn, and usually the more useful way round.
  • MRR (Monthly Recurring Revenue) — Predictable revenue that repeats every month from subscriptions or contracts.
  • Net revenue retention (NRR) — Revenue this period from last period's customers, including upgrades and downgrades, as a percentage.
  • LTV (Lifetime Value) — The total gross profit you expect from one customer over the whole relationship.

Lessons that explain it

  • Retention, referral and growth loops — A funnel needs constant refilling. A loop reinvests its own output. The difference decides whether growth compounds. (12 min)
  • Activation and retention — The two numbers that predict whether a company works. Acquisition can be bought; these cannot. (12 min)
  • Cohort analysis — Group users by when they joined and follow each group. It is the only way to tell real improvement from a growing pile of signups. (12 min)
  • Support that scales — Every repeated question is a product defect wearing a costume. Treat the ticket list as a roadmap. (10 min)
  • What product-market fit actually is — Not a score and not a moment. Retention, unprompted return and how hard people fight to keep using it. (12 min)
  • MRR and ARR — Recurring revenue is the number investors care about most — and the one founders most often calculate wrongly. (10 min)

All 176 terms in the Founder glossary