Churn rate best practices

The Ultimate (SaaS) Churn Rate Cheat Sheet This is an in-depth followup to The Ultimate SaaS Metrics Cheat Sheet. chartmogul.com/blog/2015/01/the-ultimate-saas-metrics-cheat-sheet/ What is churn rate? The rate at which you are losing customers or revenue through subscription cancellations. Why is it so important? If it's too high your churn rate will have a highly negative impact on your business and is an indicator that you should make some changes. Much has been written about the perils of having a high churn rate so we’ll not focus on the why in this cheat sheet. Calculating churn There are two main types of churn, customer churn and revenue churn. B2B tCustomer churn rate Customer churn rate = Number of customers who churned in period (excluding any customers who both joined & churned in the period) Total number of customers at start of period tMonthly recurring revenue (MRR) churn rate MRR churn rate = SUM of churn & contraction MRR-SUM of expansion & reactivation MRR MRR at start of period * When calculating churn rate it’s important not to mix subscriptions with significantly different billing periods, e.g. don’t mix annual plans in with monthly plan. B2C While most SaaS is B2B there is a significant B2C contingent. Steven H.