Glossary · Sales & CRM

Churn rate: what is the attrition rate?

6 min read · Updated on 8 July 2026
Definition The churn rate (or attrition rate) measures the proportion of customers lost over a given period. It is a key metric for any subscription-based business: high churn erodes recurring revenue (MRR) faster than new customers are acquired, mechanically capping growth.
The full entry
The essentials in brief
  • Churn rate = lost customers / customers at the start of the period. It measures attrition.
  • Monthly or annual: always specify — a 3% monthly churn heavily impacts annual figures.
  • Customer churn vs revenue churn: the latter (MRR lost) is often more meaningful in SaaS.
  • Direct impact on MRR: churn is subtracted from recurring revenue each month.
  • #1 lever for sustainable growth: reducing churn often costs less than acquiring more customers.
I How to calculate the chur...

How to calculate the churn rate

The basic formula:

Churn rate = (customers lost during the period / customers at the start of the period) × 100

Example: an SaaS SME starts the month with 200 customers and loses 6 → monthly churn = 6 / 200 = 3%.

Always specify the period. A churn rate of “3%” means nothing without knowing if it is monthly or annual. A 3% monthly churn corresponds, compounded, to a loss of around 30% of customers over a year – far heavier than it appears.

Customer churn vs revenue churn (MRR). There are two types:

  • Customer churn: number of customers lost,
  • Revenue churn: amount of MRR lost (cancellations + plan downgrades).

Revenue churn is often more relevant: losing 3 small customers does not weigh as much as losing 1 large one. Some companies even achieve negative revenue churn (net negative churn) when expansion – upsells and cross-sells – among remaining customers exceeds lost revenue.

These calculations are rough estimates: depending on the model, refinements can be made (cohorts, gross vs net churn), but the logic remains the same.

3 %
a monthly churn rate already significantly erodes the customer base over a year
≈ 1 / churn
average customer lifetime can be derived from the churn rate
< 0
negative revenue churn: when expansion exceeds losses
II Why reducing churn is the...

Why reducing churn is the key growth lever

Churn acts like a leak in the bucket: as long as it is high, every new customer acquired first serves to offset departures before adding net growth.

MRR mechanism: each month, recurring revenue changes according to
Ending MRR = Starting MRR + new + expansion − contraction − churn.
If churn absorbs most new customers, MRR stagnates despite costly acquisition efforts.

This is why, beyond a certain customer volume, reducing churn becomes more profitable than acquiring more customers: retaining an existing customer generally costs far less than winning a new one.

Concrete levers for an SME:

  1. Understand departures: systematically ask for the reason behind cancellations, identify recurring patterns.
  2. Detect early warning signs: reduced usage, repeated support tickets, inactivity – a CRM helps track these signals and act before cancellation.
  3. Improve onboarding: a customer who quickly achieves their first result stays much longer.
  4. Invest in customer success: support high-value customers, prevent rather than react.

Controlled churn extends customer lifetime, mechanically increases customer lifetime value and frees up acquisition for net growth rather than damage control.

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III Frequently asked questions

Answers to the questions we get asked most.

How do you calculate the churn rate?

Churn rate = (customers lost during the period / customers at the start of the period) × 100. For example, 6 customers lost out of 200 at the start of the month results in a monthly churn of 3%. Always specify the period (monthly or annual) and distinguish between customer churn and revenue churn (lost MRR), which is often more meaningful as it accounts for customer size.

What is the difference between customer churn and revenue churn?

Customer churn counts the number of customers lost; revenue churn measures lost MRR (cancellations and plan downgrades). The latter is often more relevant because losing three small customers does not have the same impact as losing one large customer. When expansion (upsell, cross-sell) from remaining customers exceeds losses, it is even called negative revenue churn, a sign of a very healthy model.

Why is the churn rate so important in SaaS?

Because it directly impacts recurring revenue: each month, churn is subtracted from MRR. High churn means new customers first fill the gaps left by departures before adding net growth. Beyond a certain scale, reducing churn often costs less than acquiring more customers, while extending customer lifetime and increasing customer lifetime value.

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