Formula
Churn Rate = (Customers Lost ÷ Total Customers at Start of Period) × 100
Calculation Example
If a company started with 1,000 customers and lost 50 in a month, Churn Rate = (50 ÷ 1,000) × 100 = 5%
Data Source
CRM software, customer support records, billing systems
Tracking Frequency
Monthly, Quarterly, Annually
Optimal Value
Lower is better; indicates strong customer retention.
Minimum Acceptable Value
A high churn rate suggests dissatisfaction or poor product-market fit.
Benchmark
SaaS ~3-8% monthly, Telecom ~1-5% monthly, Subscription Services ~5-10% monthly
Recommended Chart Type
Line chart (to track trends), Bar chart (to compare customer segments)
How It Appears in Reports
Displayed in customer success and financial reports to track retention.
Why Is This KPI Important?
Indicates customer satisfaction and business stability.
Typical Problems and Limitations
Does not distinguish between voluntary (customer choice) and involuntary (payment failures) churn.
Actions for Poor Results
Improve customer support, enhance onboarding, introduce loyalty programs.
Related KPIs
Customer Retention Rate, Net Promoter Score (NPS), Customer Lifetime Value (CLV)
Real-Life Examples
A SaaS company reduced churn from 8% to 4% by improving onboarding and adding personalized support.
Most Common Mistakes
Focusing on customer acquisition while neglecting retention strategies.
