What Is Churn and How to Calculate It

Churn is the loss of customers or recurring revenue during a period. The rate shows how large that loss is compared with the customer base or revenue at the start of the same period.

This is one of the concepts in the feedback and survey glossary. Below are the two main calculations and a practical way to investigate the reasons behind the number.

Definition

Customer churn counts the customers who ended their relationship with the company. Revenue churn measures recurring revenue lost through cancellations, downgrades, or smaller contracts.

The two measures answer different questions. A company can lose a few large customers and feel a meaningful revenue impact, or lose many small customers with a different financial effect.

How to calculate customer churn

Choose a period and keep the same counting rule for future comparisons.

Customer churn (%) = customers lost during the period ÷ customers at the start of the period × 100

New customers acquired during the period do not belong in the denominator. This keeps the calculation tied to the base that existed at the start.

How to calculate revenue churn

Use recurring revenue lost and recurring revenue at the start of the period.

Revenue churn (%) = recurring revenue lost during the period ÷ recurring revenue at the start of the period × 100

Decide whether downgrades count as lost revenue and document the rule. Consistency matters more than a universal formula.

Example

Illustrative example: a company starts the month with 200 customers and 10 cancel.

Churn = 10 ÷ 200 × 100 = 5%

That result describes this example period. It does not explain why cancellations happened or define a good rate for another business.

Churn and retention

Churn looks at exits; retention looks at continued relationships. When both metrics use the same population, period, and rule, they show complementary sides of the customer base.

Do not combine different periods, products, or customer profiles without labeling the difference. A change in the mix can move the rate even when one group’s experience stays the same.

How to find the reasons

A short exit survey can ask for the main cancellation reason, invite context, and measure the chance of returning. Start with the churn survey template.

The churn survey guide helps set the send timing and separate a stated reason from a team hypothesis.

Group the reasons people gave and read the comments within each group. Keep customer evidence separate from internal interpretation. That distinction prevents rushed conclusions.

The survey response rate matters too: people who respond may have a different experience from people who ignore the invite.

How to act on patterns

Prioritize recurring situations the team can investigate. Before changing the product, check whether the pattern appears across more than one period, profile, or comment, then involve the responsible team.

If you already have the numbers, use the churn calculator and compare the result with the churn survey questions.