What is churn?
Churn is the rate at which customers or users stop using a product over a period — the leak in the bucket every subscription business is filling. It comes in two flavors: customer churn (accounts lost) and revenue churn (dollars lost), which can tell very different stories when small accounts leave and large ones stay.
The two calculations
Customer churn: accounts lost in the period over accounts at its start — 500 customers, 15 cancelled, 3% monthly churn. Revenue churn weighs by dollars, and *net* revenue churn subtracts expansion; a business can lose customers while growing revenue (negative net churn), which is why the metric pair matters more than either alone. Small monthly rates compound viciously: 3% monthly is roughly a third of the base gone in a year.
When churn actually happens
The cancellation is the funeral, not the death. Most churn is decided early — in the first week, often the first session, when the product failed to take hold — and merely executed months later when someone audits subscriptions. This is why churn work concentrated at the cancellation screen (save offers, exit surveys) recovers scraps, while onboarding and activation work moves the actual number.
Reading churn usefully
- Cohort it. Churn by signup month reveals whether onboarding fixes are working — this quarter's cohorts should outlast last quarter's.
- Segment it. Churn concentrated in a plan, a persona, or an acquisition channel is a targeting insight wearing a retention costume.
- Leading-indicate it. Falling usage precedes cancellation by months; a retention curve and activity alerts buy intervention time a cancellation report never will.
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