Definition
Churn Rate measures customer attrition — the proportion of your active user base that disengages or cancels during a specific time period. It is the inverse of retention and directly impacts revenue, growth efficiency, and customer lifetime value. High churn negates acquisition efforts: if you are losing users as fast as you gain them, growth stalls regardless of how much you spend on acquisition. Understanding churn by segment (new vs. tenured, free vs. paid, by feature usage) reveals where to focus retention efforts.
Formula
How to measure
Define "churned" clearly — typically no activity for N consecutive days (e.g., 14 or 30 days) or subscription cancellation. Calculate: users who churned in period ÷ active users at the start of period. Track monthly and segment by tenure, plan, and last-used feature.
Industry benchmarks
SaaS monthly churn: 3–7% is typical; below 2% is excellent. Consumer apps: 5–15% monthly. Enterprise B2B: 0.5–2% monthly. Annual churn above 50% in SaaS signals serious product-market fit issues.