Churn: How to measure churn rate correctly

Customer churn vs revenue churn

• Customer churn = customers lost / customers at start.
• Revenue churn looks at MRR lost; NRR/GRR capture expansion and contraction.
• Use customer churn for product retention; use revenue churn for business health.

Choose a consistent period

• Monthly is common for early-stage SaaS; quarterly for enterprise.
• Keep start/end definitions consistent (e.g., start-of-month snapshot).
• Exclude trial users unless they are part of your definition.

Track churn by cohort

• Cohorts reveal where churn happens (first month vs month 6+).
• Segment cohorts by acquisition channel and plan.
• Separate involuntary churn (failed payments) from voluntary churn.