Churn rate is the percentage of customers, or revenue, a company loses over a given period, most commonly measured monthly or annually for a subscription business.
Customer churn counts the number of customers lost; revenue churn (sometimes split into gross and net) accounts for the dollar value lost or gained from existing customers, including downgrades and upgrades, not just outright cancellations. The two can tell very different stories: a company can lose a lot of small customers while its revenue churn stays low, if its larger accounts are expanding.
Even a small-looking monthly churn rate compounds quickly. A company churning 3% of customers a month loses roughly a third of its base over a year if nothing else changes, which is why investors weigh churn as heavily as growth rate when evaluating whether a subscription business is actually durable.
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