Churn rate is the percentage of customers who stop doing business with a company. It is the rate at which you lose customers. If you start the month with 1,000 subscribers and end with 950, your churn rate is 5 percent.

Churn is the silent killer of subscription businesses. Acquiring a new customer costs far more than keeping an existing one. High churn means you are filling a leaky bucket. You can grow, but you have to run faster just to stay in place. Churn comes in two types. Voluntary churn is when customers choose to leave. Involuntary churn is when they leave because a credit card expires or a payment fails. Both matter. Companies track churn monthly or annually. They analyze why customers leave. Common reasons include poor service, price, better competitors, or changing needs. Reducing churn by even a few percentage points can dramatically increase lifetime value. Retention is not glamorous, but it is where the money is.

Types of churn

• Voluntary: customer chooses to leave
• Involuntary: payment failure or expiration
• Monthly churn: measured over a month
• Annual churn: measured over a year
• Revenue churn: lost revenue from departing customers