You've gained 100 new customers this month. Congratulations! But how many have you lost? Churn is the dark side of growth, the one we prefer to ignore but absolutely must control.
In this guide, discover what churn is, how to calculate it, and, most importantly, how to reduce it.
Churn (or attrition rate) measures the percentage of customers who stop using your product or service over a given period of time. It is the opposite of retention.
In other words: how many customers are leaving?
Churn is particularly critical in subscription-based models (SaaS, telecom, streaming, etc.), where customer value is built over time.
Acquiring a new customer costs 5 to 25 times more than retaining an existing customer. Churn is therefore directly linked to your profitability.
A churn rate of 5% per month may seem low, but over a year, that's 46% of your customer base evaporating. The effect is cumulative.
Churn is a symptom of a problem. High churn indicates that something is wrong: product, price, support, competition, etc.
Your actual growth = new customers - lost customers. High churn can negate all your acquisition efforts.
Formula:
Churn rate = (Customers lost during the period / Customers at the beginning of the period) × 100
Start of month: 1,000 customers. End of month: 950 customers (50 departures).
Churn = (50 / 1000) × 100 = 5%
More relevant for SaaS: measures lost recurring revenue.
Formula:
MRR churn = (MRR lost during the period / MRR at the beginning of the period) × 100
Revenue churn may differ from customer churn if the customers who leave are larger or smaller than average.
A negative net churn means that the expansion of existing customers offsets departures. It's the Holy Grail.
Benchmarks vary depending on the sector and model:
General rule: in B2B SaaS, aim for less than 5% annual churn for healthy growth.
The customer consciously decides to leave: dissatisfaction, switching to a competitor, no longer needing the service, etc.
The customer did not want to leave, but their payment failed: expired card, banking issue, etc. Often accounts for 20-40% of total churn.
Customer service is a major lever for reducing churn:
Investing in excellent customer service means investing directly in reducing churn.
Why are customers leaving? Conduct exit surveys, analyze recent interactions, and identify patterns.
The first few days are critical. A customer who doesn't quickly understand the value is likely to leave. Guide, support, and measure activation.
Response time, resolution rate, quality of interactions... Every improvement reduces churn.
Klark helps improve customer service: faster, more accurate responses, leading to more satisfied customers and less churn.
Decreased usage, repeated tickets, negative sentiment... These signals indicate churn. Take action before it's too late.
New features, training courses, exclusive content... Give people reasons to stay, not just not to leave.
A customer who upgrades to a higher plan is less likely to churn. Expansion is the antidote to churn.
Payment reminders, card updates, dunning management... Win back customers who leave unintentionally.
AI helps identify at-risk customers before they leave:
A churn risk score (0-100) allows you to prioritize retention actions for the customers most at risk.
"We gain more than we lose" is not a strategy. Churn silently undermines your growth.
Revenue churn is often more relevant. Losing 10 small customers ≠ losing 1 large customer.
Overall churn hides different realities by segment, offer, length of service, etc. Analyze carefully.
When the customer asks to cancel, it is often too late. Respond to weak signals.
Retention discounts can attract bargain hunters. Target genuine at-risk customers.
Both are useful. The monthly report for operational management, the annual report for strategic vision.
For customer churn, no (they remain customers). For revenue churn, yes (you lose MRR).
Compare yourself to your industry and segment. Overall averages are misleading.
Yes! If the growth of existing customers exceeds the losses. This is a sign of an excellent product-market fit.
Churn is the silent enemy of growth. Controlling it means securing your revenue base and building a sustainable business.
The keys to reducing churn:
Your customer service directly impacts churn. Discover how Klark can help you retain your customers.
