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Prevent Churn Before it Happens
Proactively prevent churn by knowing who is going to churn and why. More happy customers and higher NDR.
Frequently Asked Questions: Churn Rate
Churn rate measures the percentage of customers who cancel or opt-out of your product or service over a given time period. It's a critical metric for subscription-based businesses as it directly impacts revenue, growth potential, and overall profitability.
A high churn rate is a red flag, signaling issues with product-market fit, customer experience, pricing model, or competitive landscape. Monitoring and minimizing churn should be a top priority for SaaS companies looking to build sustainable, profitable businesses.
While churn rates can vary across industries, a churn rate between 5–20% annually is typically viewed as healthy for SaaS businesses (Data from Stripe). Churn rates above 20–30% are considered relatively high and might indicate a mismatch between the customers you’re bringing onboard and the price/offering of your company, but this can vary for different industries. Also note that a monthly churn rate will usually differ from an annual churn rate.
Here are some churn benchmarks for various industries:
- Media and entertainment: 20%–30%
- Online retail subscriptions: 15%–20%
- Fitness and wellness: 10%–15%
- SaaS (software-as-a-service): 5%–7%
- Telecommunications: 2%–5%
Improving customer onboarding, offering top-notch support, continuously enhancing product features, implementing customer health scoring, and nurturing product champions can all help minimize churn.
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No, logo churn and revenue churn are different metrics. Logo churn tracks the number of customers lost, while revenue churn measures the monthly recurring revenue (MRR) lost from churning customers. For more info, check out our section on Revenue churn vs. Customer churn above.
Absolutely. Since LTV is calculated based on factors like gross margins and churn rates, a high churn rate will directly lower a customer's projected LTV. Reducing churn increases LTV.
Churn rate should be monitored on a continuous basis to quickly identify and address any concerning spikes. Most SaaS companies measure churn at least monthly, while many track it weekly or even daily. Analyzing churn trends over time is important, but being able to course-correct at the first signs of increasing churn is ideal. An annual churn metric provides a high-level view for business reviews as well.