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Customer Churn

The rate at which customers stop using or paying for a product over a given time window.

Churn is usually measured as customer churn (logos lost divided by logos at start of period) and revenue churn (ARR lost from cancellations and downgrades). Net revenue retention adds expansion back in — a healthy SaaS business typically has single-digit monthly revenue churn and NRR above 100%. Churn compounds: a 5% monthly churn rate loses nearly half of any cohort in a year.

The causes of churn are usually segmented into product fit (wrong customer acquired), value (customer never realized ROI), and competitive (switched to an alternative). Each cause points at a different fix: tighter ICP, better onboarding, or stronger differentiation. Churn post-mortems — combined with win-loss — are a gold mine of competitive and product intelligence.

Why it matters

You cannot outrun churn with new sales forever. Reducing churn is usually the single highest-ROI activity in a mature SaaS business.

Related terms

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