This document discusses different types of churn that companies should measure to understand customer retention. It defines customer churn as the percentage of customers lost over a period of time. Revenue churn measures the percentage of annual recurring revenue lost from churned customers. Monthly subscription churn isolates churn for monthly subscribers. Net churn considers both monthly churn and new revenue to assess a company's overall health. The document emphasizes that looking at multiple churn metrics provides a fuller picture of customer retention than a single churn rate.

1. The no-BS guide to
Understanding Churn

2. First things first:
WHAT THE &#%! IS
CHURN?

3. “… measures the ultimate failure in SaaS—all of the customers
who tried out your product and decided it isn’t worth paying for”
CHURN…
Steli Efti | Co-founder & CEO, Close.io

4. The only way to solve churn is
BRUTAL HONESTY

5. Instead of looking at the facts, they …
manipulate the data
… and pretend the problem isn’t there

6. BE LIKE THEM
DON’T

7. Most startups only measure
Customer Churn

8. Say you sell SaaS software to 100 restaurants and
two accounts churn this month

9. is a small downtown cafe
ONE

10. A 1,000-franchise chain
The other?

11. At 2%, your churn rate looks great
but you just lost 25% of your revenue

12. It’s time for a
NEW APPROACHto churn

13. There are four types of churn
you need to measure

14. CUSTOMER#1:
Customer churn measures how many customers you lost over a
period of time.

15. FORMULA:THE
Churned customers
Total customers

16. EXAMPLE:FOR
• January 1st, 2015: 1,000 customers
• January 1st, 2016: 950 customers

17. EXAMPLE:FOR
50 churned customers
1,000 total customers
= 5% customer churn

18. REVENUE#2:
Revenue churn measures how much annual recurring revenue
(ARR) you lost due to churning customers.

19. FORMULA:THE
Churned ARR
Total ARR

20. EXAMPLE:FOR
• January 1st, 2015: $50,000 ARR
• January 1st, 2016: $40,000 ARR

21. EXAMPLE:FOR
$10,000 ARR
$50,000 ARR
= 20% revenue churn

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23. Monthly Sub#3:
Monthly subscription churn isolates and measures the rate at
which your monthly subscribers are churning, separate from
your annual subscribers

24. FORMULA:THE
Churned monthly subscriptions
Total monthly subscriptions

25. EXAMPLE:FOR
• January 1st, 2015: 50 monthly users, 50 yearly users
• February 1st, 2015: 43 monthly users, 53 yearly users

26. EXAMPLE:FOR
7 churned monthly subscribers
50 total monthly subscribers
= 14% monthly sub churn

27. Net#4:
Net churn measures monthly churn and growth to give you a
clear look at the actual health of your startup.

28. FORMULA:THE
(Churned MRR − New MRR)
Total MRR

29. EXAMPLE:FOR
• January 1st, 2015: $100,000 MRR
• January 18th, 2015: Lost $5,000 MRR
• February 1st, 2015, Gained $10,000 MRR

30. EXAMPLE:FOR
($5,000 churned MRR − $10,000 new MRR)
100,000 total MRR
= -5% net churn

31. THE WHOLE
One churn rate can’t tell
STORY

32. The CRM made by salespeople, for salespeople

33. Customer churn:
Churned customers
Total customers
Revenue churn:
Churned ARR
Total ARR
Monthly Subscription churn:
Net churn:
Churned monthly subscriptions
Total monthly subscriptions
(Churned MRR − New MRR)
Total MRR

34. Want more?
Check out the original
video and learn how to
improve your churn rates!

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