Churn rate
customer churnChurn rate tells you what share of your customers end their relationship during a given period. It is calculated by dividing customers lost in the period by the customer count at the start of it. A 5 % monthly churn means nearly half your customers turn over in a year.
Good to know
Churn is the quiet counterforce of growth: new customers first have to replace the leavers before anything grows the business. Even a small improvement in churn raises lifetime value directly, which is why retention is almost always the cheapest growth lever.
Alongside customer count, track revenue churn: one large account leaving can equal fifty small ones. At best, expansion revenue from existing customers exceeds the value of leavers, which is called negative churn.
FORMULA
How churn is calculated
Churn rate is customers lost during the period divided by the customer count at the start of the period.
Churn = lost customers ÷ customers at start × 100
Subscription businesses also track revenue churn, which weights the departure of large customers correctly.
EXAMPLE
At 3 % monthly churn, an average relationship lasts about 33 months.
PITFALLS
Two ways to misread churn
The denominator is chosen wrong
If customers gained during the month are counted in the denominator, churn looks smaller than it is. The denominator is the base at the start of the period.
Seasonality is read as a trend
A January cancellation spike at a gym is a calendar, not a crisis. Always compare against the same period last year.
The dormant are counted as customers
A customer who has not bought in two years is a memory, not a customer. Define an activity threshold, or churn looks too small.
FREQUENTLY ASKED
Frequently asked questions
What is a good churn level?+
In consumer subscriptions 3–7 % per month is common; in B2B contracts a good level is under 1–2 % per month. Your own trend matters most.
How do I reduce churn?+
Spot likely leavers early from usage data, invest in onboarding during the first weeks and stay in touch beyond the invoice.
What does churn have to do with marketing?+
Everything: the lower the churn, the higher the lifetime value, and the more boldly you can invest in acquisition compared to competitors.
What is negative churn?+
A state where expansion purchases from remaining customers exceed the value of those who left. Revenue grows even as customers leave.
FOR YOUR BUSINESS
Want results, not just definitions?
We go through your goals and propose channels and a budget in 30 minutes, free of charge.
FOR STUDENTS AND NEWCOMERS
Learn the terms, then come and put them to work
The glossary is free study material. Go deeper in our training, and if you want to work in the field, our growing team is looking for people.
Maintained by the VSCY editorial team · Updated 6 Aug 2026 · Part of the marketing glossary (99 terms)
