Churn Rate
Also known as: Customer Churn, Revenue Churn
Definition
Churn rate measures lost customers or lost recurring revenue over time. Customer churn counts logos; revenue churn counts dollars. The distinction matters because losing one large account can damage enterprise value more than losing several small customers.
Churn is not only a customer-success metric. It is a product, sales, delivery, onboarding, pricing, and expectation-setting metric.
In diligence, churn analysis should be cohort-based and segmented by customer type, contract size, acquisition channel, and implementation model.
Related terms
- Gross Revenue Retention (GRR) — Revenue retained from existing customers before expansion. GRR shows how much revenue survives without upsell.
- Logo Churn — The percentage of customer accounts lost over a period, regardless of the revenue size of each account.
- Net Revenue Retention (NRR) — The percentage of recurring revenue retained from existing customers a year later, including expansion, after subtracting churn and contraction. The single most-watched B2B SaaS valuation metric.
Where this gets applied
- Revenue Architecture — ICP, deal-desk, sales-engineering ratios, MEDDPICC, deal-stage definitions. Move win rates from 29% to 68%.
- GTM Execution — Pipeline coverage, top-down/bottom-up motion, AE/SE ratios, comp realignment, partner-channel structure.
- Unit Economics — CAC payback, NRR, gross margin by segment, cohort analysis, paid-on-bookings vs. paid-on-cash.