Churn

Churn is the rate at which you lose customers or recurring revenue in a period. A business can add MRR every month and still shrink if churn is higher.

Two ways to measure churn

• Customer (logo) churn is the share of customers who cancel in a period: churned customers ÷ customers at the start.
• Revenue churn is the share of MRR lost. Gross revenue churn counts cancellations and downgrades only. Net revenue churn subtracts expansion from the customers who stay.

High logo churn with low revenue churn means you are losing small accounts and keeping big ones. The reverse is a bigger problem.

Voluntary vs involuntary churn

Involuntary churn happens when a payment fails and is never recovered. The customer didn't decide to leave. Their card failed. You can often win these customers back by asking them to update their card, which is why dunning and failed-payment alerts help.

Reducing churn

• Catch failed payments early so customers can update their card before the subscription lapses.
• Follow up on cancellations while the reason is fresh.
• Track net revenue retention to see whether expansion outpaces churn.

ChargeBell posts cancellations and failed payments to Slack as Stripe reports them, so your team sees churn the day it happens instead of at month end.