Quick answer
Churn is the share of customers who cancel in a given period. Lower is better. Gross churn counts only cancellations. Net churn also counts expansion revenue.
What it is
Churn measures customer loss. Monthly churn is the share of customers who cancel in a month. Gross churn counts only cancellations. Net churn subtracts expansion revenue from cancellations.
Why it matters
Churn is the key health metric for a SaaS. Lower churn means longer customer lifetimes and higher valuations. Small improvements compound over years.
How to use it
- Track churn monthly by cohort and by segment.
- Watch for early warning signs: usage drops, support tickets, low scores.
- Reach out to at-risk accounts before they cancel.
- Connect churn to specific features or onboarding steps.
Examples
- A SaaS reduces monthly churn from 4% to 2% and adds 5 years to its average customer lifetime.