Churn & retentionMetric 8 of 35
Customer Churn Rate
The percentage of customers who cancel each month.
The share of paying customers who cancelled this period. Also called logo churn. This is the headline retention number — every other retention metric is a derivative.
Formula
Customer Churn = Churned Customers ÷ Customers at Start of PeriodWorked example
Start month with 400 customers, 8 cancel → Customer Churn = 8 ÷ 400 = 2.0% monthly = ~21.5% annual.
Benchmark
B2B SaaS monthlyTop quartile
< 1%
Median
1–3%
Concerning
> 5%
Why it matters
Customer churn caps your maximum customer count. At 5% monthly churn, you cap out around 1 / 0.05 = 20× monthly new acquisition. You literally cannot grow past that ceiling without either reducing churn or accelerating acquisition forever. Most failed SaaS startups have a churn problem disguised as a growth problem.
Common mistakes
- Excluding involuntary churn (failed cards) from the headline number — that's a measurement choice, not a definition.
- Annualising monthly churn by multiplying by 12 (it's compounding: 1 − (1 − m)¹²).
- Mixing B2B and B2C benchmarks — a healthy B2C number is a death sentence for B2B.
Tracked in FlowMRR
Retention → churn trend card, split by logo count and by revenue.
