Churn Rate
Churn rate is the percentage of customers (customer churn) or revenue (revenue churn) lost during a given period, typically measured monthly or annually.
There are two types of churn:
**Customer churn rate** = Customers lost / Starting customers × 100 **Revenue churn rate** = MRR lost / Starting MRR × 100
SaaS benchmarks: Annual customer churn of 3-5% is excellent, 5-10% is good, and above 10% signals problems. Monthly churn above 2% is a red flag.
Revenue leakage inflates apparent churn rates because involuntary churn (payment failures) gets counted alongside voluntary churn. Separating these two components is essential for accurate analysis — you can't reduce voluntary churn with dunning, and you can't reduce involuntary churn with better onboarding.
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Further Reading
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