Metrics & Performance
Churn
The rate at which customers cancel or fail to renew their subscriptions over a given period, expressed as a percentage of total customers or revenue.
Churn measures how much of your customer base or revenue you lose in a given period. Customer churn (or logo churn) tracks the percentage of customers who cancel, while revenue churn (or gross revenue churn) measures the percentage of recurring revenue lost to cancellations and downgrades — before accounting for expansion revenue from existing customers.
Churn is the single most important metric for SaaS businesses because it determines whether growth is compounding or eroding. High churn means you're constantly refilling a leaky bucket — spending on acquisition just to replace lost customers. Low churn means revenue is sticky and compounds over time.
In Practice
A SaaS company starts the month with 100 customers at $100/month each ($10,000 MRR). Ten customers cancel during the month. Customer churn = 10%. Revenue churn = 10% ($1,000 lost). If 5 remaining customers upgrade, net revenue retention could still be positive.
Why It Matters
Investors scrutinize churn more than almost any other SaaS metric. High churn signals a product-market fit problem and makes the business economically unsustainable — CAC payback never comes if customers leave before you recoup acquisition costs. Benchmark: best-in-class SaaS companies have annual gross churn below 5%.