# What is Churn Rate?

What is Churn Rate? The percentage of customers/subscribers who stopped buying or paying in a given period.

## How it works in practice

Churn is a 'leak in the bucket.' As long as you're filling from the top (acquisition) and losing from the bottom (churn), you're not really growing. Reducing churn is equivalent to growth — at a lower cost. A store that cuts churn by 2% doesn't need an extra $5,500 in ad spend.

## Related metrics

- LTV — high churn means low LTV
- MRR — churned MRR destroys net growth
- Retention Rate — the inverse of churn
- Win-Back Campaign — attempts to reverse churn

## Common misconception

'Churn is inevitable.' True, some natural churn exists — but 70% of causes are solvable: poor service, a product that didn't meet expectations, competition, and forgetfulness. Only about 30% are 'life circumstances' (moving abroad, a change in financial situation).

## How to fix it

High churn? (1) Send an exit survey: 'Why did you cancel?' — max 3 questions, (2) run a churn cohort analysis — when do most people leave? (after month one? three?), (3) add an offboarding flow — before cancellation, offer to pause or downgrade, (4) try to save them with 'stay a month and get X.'

## Real-world example

An Israeli SaaS company: 7%/month churn. An exit survey found 62% said 'I didn't understand how to use it.' They improved onboarding: 3 video tutorials plus a week-2 check-in call. Churn fell to 2.8% within 4 months — a 4x ROI on the onboarding investment.

## Where to start

Track churn rate monthly. Benchmark: eCommerce < 5%, SaaS < 2%, Subscription Box < 7%. Above benchmark, run an exit survey immediately. Reduce churn before increasing ad spend.

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Category: Finance · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/churn-rate