3 Churn Measurements You Should Already Know

Leading subscription-based companies have nailed customer churn - they know how to calculate it, know what it’s saying about their businesses and know how to use measurements to their advantages in growing businesses. There are so many different formulas and techniques to measure churn which can get quite confusing. So, here is a quick breakdown for you:

Customer Churn Rate

Customer Churn (or customer attrition) is calculated as the ratio of the number of customers lost during a specific period (typically a month or a year) and the number of customers present at the beginning of that time. It’s usually expressed as a percentage:

Customer Churn =

‍

There are two types of ways you can calculate for revenue churn: ‍

Gross Revenue Churn Rate‍

Gross Revenue churn shows you how much revenue you are losing, regardless of revenue expansion, and upgrades within the existing customer base. It helps you focus on how much revenue leakage is happening.

Gross Revenue Churn Rate =

‍

Net Revenue Churn Rate ‍

Net Revenue churn rate attempts to paint a picture of the reality after taking into account what’s lost (via cancellations, downgrades) and what’s gained (via expansion, reactivation, and upgrades).

Net Revenue Churn Rate =