Calculate your customer retention rate and churn metrics. Free tool for subscription and ecommerce brands — see how many customers you're keeping, the revenue impact of churn, and what it costs to replace lost customers.
Number of customers at the start of the period
Number of customers who canceled or stopped buying
The timeframe for your customer data
How you want to measure customer value
Average monthly revenue from each customer
Optional: Cost to acquire a new customer (ads, sales, marketing)
What this means: Your monthly churn rate of 5.00% is moderate. There's room for improvement. Focus on improving customer experience, product quality, and engagement to reduce churn.
Churn Rate = (Customers Lost / Starting Customers) x 100. This shows what percentage of your customer base you're losing each period. Lower is better - it means you're keeping more customers.
If tracking monthly or quarterly churn, we calculate the annual churn rate using compound loss: Annual Churn = 1 - (1 - Period Churn)^Periods. A 5% monthly churn compounds to 46% annual churn.
Multiply churned customers by their value (monthly revenue x period length, or lifetime value). This shows exactly how much revenue you're losing to churn and helps justify retention investments.
Include CAC to see the true financial impact. Losing a customer means losing their revenue AND paying to acquire a replacement. This makes retention 5-25x more cost-effective than acquisition.
Churn rate is your canary in the coal mine. Rising churn signals product issues, poor customer service, pricing problems, or competitive threats before they destroy your business. Track it monthly to catch problems early.
Retention is 5-25x cheaper than acquisition. Reducing churn from 10% to 8% monthly means each customer stays 2 months longer, generating 25% more lifetime revenue. Small retention improvements have massive profit impact.
High churn is like pouring water into a leaky bucket. If you acquire 100 customers monthly but lose 90 to churn, you only grow by 10. Fix retention first, then pour in acquisition - it's the key to sustainable growth.
Churn rate directly determines customer lifetime. 10% monthly churn = 10 month average lifetime. 2% monthly churn = 50 month lifetime. Longer lifetimes mean you can afford higher CAC and outspend competitors on acquisition.
Excellent: <5% monthly (58% annual) | Good: 5-7% (58-70% annual) | Concerning: >10% (72%+ annual)
Excellent: <20% annual | Good: 20-30% annual | Concerning: >40% annual
Excellent: <7% monthly (65% annual) | Good: 7-10% (65-74% annual) | Concerning: >12% (80%+ annual)
Excellent: <5% annual | Good: 5-10% annual | Concerning: >15% annual
Note: Benchmarks vary by industry, business model, and customer segment. Early-stage companies typically have higher churn than mature businesses. Focus on month-over-month improvement rather than absolute benchmarks.
Track churn as a core KPI in monthly reports. Monitor trends over time and correlate with product changes, marketing campaigns, or customer service issues. Set up alerts when churn exceeds acceptable thresholds.
Calculate the ROI of retention initiatives. If reducing churn from 8% to 6% saves $50,000 monthly, you can justify significant investment in customer success, onboarding improvements, or product enhancements.
Calculate churn for different customer segments (by source, plan type, geography). Identify which cohorts have healthiest retention and model acquisition strategy around similar profiles.
Test how pricing changes, billing frequency, or contract length affect churn. Annual subscriptions typically have lower churn than monthly, but require stronger upfront value proposition.
Churn rate is a critical metric for investors evaluating business health. Low, declining churn signals product-market fit and sustainable growth. High or rising churn raises red flags about viability.
Let our team help you implement data-driven strategies that drive real results.