Product-Led Growth
Churn Rate
The percentage of customers who cancel or stop using your product in a given period.
Churn rate is the percentage of customers who stop using your product in a given time period. Monthly churn = (customers lost / customers at start of month) x 100. If you started January with 200 customers and lost 10, your monthly churn is 5%.
Annual churn isn't just monthly churn times 12, it compounds. A 5% monthly churn is closer to 46% annually, not 60%.
What "good" looks like#
It depends on your market. Consumer SaaS can survive higher churn because acquisition is cheaper. Enterprise SaaS aims for sub-5% annual churn. If you're charging $500/month per seat, losing 10% of customers per year is a very different problem than at $10/month.
Churn is a symptom, not a cause#
Users who never got value from your product churn because of an onboarding problem. Power users churn when a competitor ships something better. Budget customers churn when the economy tightens. Lumping all churn together hides the actual diagnosis.
Look at churned accounts: when did they stop logging in? What features did they never use? What support tickets did they open? There's usually a pattern.
Your customer surveys and forms are one of the best tools for catching churn signals before someone cancels. Ask why. People will tell you.