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A/B Testing

Churn Rate

Percentage of customers lost over specific time

Churn Rate measures the percentage of customers or revenue lost over a specific period, typically monthly or annually. This critical metric indicates customer satisfaction, product-market fit, and business sustainability. For subscription businesses, churn directly impacts growth trajectory and company valuation. Customer churn rate is calculated as customers lost divided by total customers at period start. Revenue churn rate is lost recurring revenue divided by total recurring revenue at period start. For example, losing ten of one hundred customers yields ten percent monthly customer churn. Types of churn include voluntary churn where customers actively cancel, involuntary churn from failed payments, and downgrades representing contraction. Net churn accounts for expansion revenue from existing customers, potentially resulting in negative churn when expansion exceeds losses. Product managers analyze churn by cohort, segment, product tier, customer lifecycle stage, and cancellation reason. Healthy SaaS businesses maintain monthly churn below five percent, ideally below three percent. High churn indicates problems with product value, user experience, customer success, pricing fit, or target market selection. Reducing churn requires understanding root causes through exit interviews, usage analytics, and cohort analysis, then addressing issues through product improvements, better onboarding, proactive support, pricing adjustments, and customer success programs. Even small churn improvements compound significantly over time.

Understand Churn Rate in SaaS product management. Learn how measuring customer loss guides retention strategies and predicts growth.