Glossary › Churn Rate

What Is Churn Rate?

Churn rate is the percentage of customers or recurring revenue lost over a given period, typically measured monthly or annually. Churn is the force working against growth in every subscription business — it determines how much new revenue a company needs just to stay flat.

Customer Churn vs Revenue Churn

There are two ways to measure churn, and they tell different stories:

Customer churn (logo churn) — the percentage of customer accounts lost. If you start the month with 200 customers and 6 cancel, your monthly customer churn is 3%.
Revenue churn (MRR churn) — the percentage of recurring revenue lost. This can differ significantly from customer churn if your pricing varies by account size.

A company might lose 5% of its customers (mostly small accounts) but only 2% of its revenue. Or it might lose just one enterprise customer and see 10% of revenue disappear. Revenue churn is generally the more useful metric for understanding business health.

How Churn Rate Connects to Retention Metrics

Churn rate is the inverse of retention. A 5% annual revenue churn rate means 95% GRR (Gross Revenue Retention). When expansion revenue from upsells and cross-sells is factored in, the result is NRR (Net Revenue Retention).

Churn also feeds directly into LTV calculations. The basic LTV formula divides average revenue per account by the churn rate — so cutting churn in half doubles the theoretical lifetime value of each customer.

Churn Rate Benchmarks for SaaS

According to Recurly's churn rate benchmarks, the average annual B2B SaaS churn rate is approximately 5%. Enterprise SaaS averages closer to 3.8% annually, while SMB-focused SaaS sees around 7.5%. Monthly churn benchmarks vary by segment: mid-market runs 1.5-3%, while small and medium SaaS firms typically see 3-5%.

Annual churn above 10% is a warning sign for any SaaS business. Above 20%, the company is replacing a fifth of its revenue base every year — a treadmill that gets harder to sustain as ARR grows.

How Content Strategy Affects Churn

BOFU content reduces churn indirectly by attracting better-fit customers. Buyers who find a product through comparison pages have already weighed alternatives and made a deliberate choice. They're less likely to churn than someone who signed up impulsively from a paid ad.

Product-led content also helps — customers who understand the product's capabilities before signing up set accurate expectations and adopt more features, both of which correlate with lower churn.