Quick answer
Churn is the percentage of customers who cancel in a given period. Lower is better. Gross churn measures all cancellations; net churn includes expansion.
What it is
Churn measures customer loss. Monthly churn is the percentage of customers who cancel in a month. Gross churn includes only cancellations; net churn subtracts expansion revenue from cancellations and can be negative for fast-growing SaaS.
Why it matters
Churn is the most important health metric for a SaaS. Lower churn means longer customer lifetimes, more NRR and a higher valuation. Small reductions in churn compound over years.
How to use it
- Track churn monthly by cohort and by segment.
- Identify the leading indicators: usage drops, support tickets, NPS detractors.
- Build proactive saves: outreach to at-risk accounts before they cancel.
- Tie churn to specific features, onboarding steps or support issues.
Examples
- A SaaS reduces monthly churn from 4% to 2% and adds 5 years to its average customer lifetime.