Contraction Velocity
How quickly new customers shrink or leave — the early-warning mirror of expansion velocity.
What is it?
Contraction Velocity is the share of new customers who contract or churn within a short window of signing up — the early-warning mirror of expansion velocity. It flags customers who were never a good fit before they cost you much.
A high early-contraction rate is usually an acquisition problem, not a retention one. It means you are winning customers who do not stick — often a targeting, pricing or onboarding mismatch that shows up in the first sixty days.
How to calculate?
Divide the number of new-MRR events followed by a contraction or churn event within the window by the total number of new-MRR events. Use the same window as expansion velocity so the two can be read side by side.
When it is high, look upstream: the fix is usually in who you acquire and how you onboard them, not in a save motion after the fact.