Churn is the metric that shows how many customers stop using a product for some reason.
Customer churn is one of the key growth metrics for any subscription business. It's also the opposite of retention.
Churn can happen due to active cancellations or simply because the customers don't renew their subscription.
Churn rate is the percentage of customers that stop doing business with a company within a certain time period. To calculate it, divide the number of customers lost during a given period by the number of total customers at the beginning of the period.
- Revenue churn refers to the amount of lost profit as a result of customer churn.
- More specifically, MRR churn is the share of monthly recurring revenue lost due to customer cancellations.
- The gross MRR churn rate is the share of total monthly revenue lost from canceled contracts.
- Net MRR churn rate refers to the total monthly revenue lost from canceled contracts, after factoring in any revenue from existing customers.
- Negative churn (or net negative churn) happens when customer upgrades outweigh the downgrades and cancellations.