Enter customers at the start of the period and how many you lost to find your churn rate, retention rate, and average customer lifespan.
Churn rate is the percentage of customers who stop doing business with you during a given period. For subscription and recurring-revenue businesses it is a make-or-break metric, because high churn quietly erodes growth no matter how many new customers you add.
The basic formula is Churn Rate = (Customers Lost ÷ Customers at Start) × 100. If you began the month with 1,000 customers and lost 50, your churn rate is 5%. Retention rate is simply the mirror image: 100% minus churn, or 95% in this example.
Churn directly determines how long customers stay. Average lifespan = 1 ÷ churn rate. A 5% monthly churn implies an average customer life of 20 months; cut churn to 2.5% and that doubles to 40 months. Because lifespan multiplies into lifetime value, even small churn reductions have an outsized effect on long-term revenue.
Tip: Distinguish customer churn from revenue churn. Losing ten small accounts is very different from losing one large one. Track revenue (or MRR) churn alongside customer churn to see the true financial impact.
The most effective levers are strong onboarding, ongoing customer success, addressing the reasons customers leave, and re-engaging at-risk accounts before they cancel. Even a one-percentage-point reduction in monthly churn compounds dramatically over a year. The chart shows how a customer cohort shrinks period by period at your current rate.