What is churn, and why does it matter in SaaS?
Churn is the rate at which customers stop paying. It is a critical SaaS metric because subscription revenue is cumulative: each month’s revenue is last month’s revenue, minus what churned, plus what was added. High churn can offset even strong sales growth.
Customer churn measures the number of accounts lost, while revenue churn measures the value lost. Net revenue retention also accounts for upgrades from existing customers, and a figure above one hundred per cent means the existing customer base is growing on its own.
Many causes of churn are product-related, including ineffective onboarding, limited support tooling and performance problems.
For businesses commissioning a platform, investment in onboarding, empty states and early user value is often as important as advanced features.
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