What is Churn Rate?
The percentage of subscribers who discontinue their subscriptions within a given time period.
Deep Dive
Churn is the silent killer of growth. If you add 100 customers but lose 10, your churn rate is 10%.
Reducing churn is often 5x cheaper than acquiring new customers. It's improved by better onboarding, customer success, and product quality.
Key Takeaways
- Critical metric for all recurring revenue models.
- Can be 'Voluntary' (canceling) or 'Involuntary' (card failure).
- Net Negative Churn is the goal (upsells > lost revenue).
- Lower churn automatically increases LTV.
Why This Matters Now
You can't fill a bucket that has a hole in the bottom. Churn is the hole.
In the subscription economy (SaaS, Netflix, Gyms), Churn is the single most important metric. If churn is high, growth is mathematically impossible because you eventually run out of new humans to acquire.
Common Myths & Misconceptions
Zero churn is possible.
Reality:Impossible. People die, businesses go bankrupt, credit cards expire. 1-2% monthly churn is considered 'healthy'.
Churn is a product problem.
Reality:Often it's a *sales* problem. If you sell to the wrong people (who don't really need it), they will churn no matter how good the product is.
Real-World Use Cases
Dunning Management: Automatically retrying failed credit cards 3 times to prevent Involuntary Churn.
Exit Surveys: Asking 'Why are you leaving?' and using that data to fix the product roadmap.
Frequently Asked Questions
What is Negative Churn?
The holy grail. When the extra revenue from upgrades (upsells) exceeds the revenue lost from cancellations. Your revenue grows even if you don't add a single new customer.
How do I calculate it?
(Lost Customers / Total Customers at Start of Month) * 100.
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