Customer Churn Rate
The difference between logo churn and revenue churn — and why the headline number rarely tells the full story.
What is it?
Customer churn rate measures the percentage of customer accounts that stop paying during a given period. It is the counterweight to growth: every new logo you win can be undone by the ones you lose, and the customers who leave are often the ones you invested the most to acquire.
It is deceptively simple and easy to game. The same underlying losses can look very different depending on whether you count logos or dollars, and whether you include customers who never really onboarded — so the definition matters as much as the number.
How to calculate?
Divide the number of customers lost during the period by the number of customers at the start of the period. Exclude new customers who signed up and churned in the same period so you do not mask the health of your installed base.
Report it consistently on the same cadence, and resist annualising a monthly rate by simply multiplying by twelve — churn compounds, so 6% a month is closer to 52% lost over a year, not 72%. Pair logo churn with revenue churn to see whether the customers leaving are larger or smaller than average.
Decisions to be made
The way you count churn changes what the trend means.
- Do you measure logo churn, revenue churn, or both?
- Do you include involuntary churn from failed payments?
- Do you report monthly, quarterly, or annualised rates?