The formulas
Use the same period every time — monthly for subscriptions, quarterly or yearly for project work.
- Customer churn rate = customers lost during the period ÷ customers at the start of the period.
- Revenue churn rate = recurring revenue lost (cancellations + downgrades) ÷ recurring revenue at the start.
- Net revenue retention = (starting revenue − churn − downgrades + expansion) ÷ starting revenue.
Find out why
Numbers tell you how much; only customers tell you why. Ask every leaving customer one question — 'what was the main reason?' — and group the answers. Then look for patterns by signup month, acquisition channel and product.
Early warning signs
- Falling usage or order frequency.
- Support tickets going unanswered or repeating.
- The main contact leaving the customer's company.
- Late payments.
Fix the biggest reason first
Pick the single most common reason and fix it before anything else. A better onboarding for new customers often cuts early churn more than any discount.