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June 14, 2026
The Dispatch

Definition

Churn Rate

Churn rate is the percentage of customers or revenue a company loses over a given period.

Customer churn measures the share of customers who stop using the product in a month or year; revenue churn measures lost recurring revenue. High churn undermines growth because the company must keep acquiring customers just to stand still, and it lowers customer lifetime value.

'Net revenue retention' adjusts churn for upsells and expansions among remaining customers; a figure above 100% means existing customers grow enough to offset those who leave. Low churn is a hallmark of strong product-market fit in subscription businesses.

Related terms

  • Lifetime Value (LTV)LTV is the total profit a company expects to earn from a customer over the entire duration of the relationship.
  • Net Revenue RetentionNet revenue retention (NRR) measures how recurring revenue from existing customers changes over a year, after upsells, downgrades and churn.
  • Annual Recurring Revenue (ARR)ARR is the predictable, recurring revenue a subscription business expects to earn over a year from its contracts.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.