metricaas

Retention and churn

How much of your customer base and revenue you keep over time.

13 terms

Illustration of churn: a bucket of subscribers with small leaks representing customers and revenue slipping away.

Churn

Churn is the loss of customers or revenue in a period. In a SaaS, it measures how many customers cancel (customer churn) or how much recurring revenue disappears (revenue churn). It is the metric that reveals whether growth is sustainable: the higher the churn, the more new sales you need just to avoid shrinking.

Illustration of net revenue retention: a customer base that grows on its own with a compounding expansion arrow.

Net Revenue Retention (NRR)

Net Revenue Retention (NRR) measures how much of the recurring revenue from your current base you keep over time, already accounting for upgrades and expansion, minus downgrades and cancellations. Above 100% it means the base grows on its own, even without new customers.

Illustration of gross revenue retention: a customer base that leaks through contraction and churn, capped at the 100% line.

Gross Revenue Retention (GRR)

Gross Revenue Retention (GRR) measures how much of the recurring revenue from your current base you keep over time counting only the losses, contraction and cancellations, and ignoring any expansion. That is why it never goes above 100%: it shows the pure leakage of the base.

Illustration of revenue retention: the recurring revenue of a customer base kept over time.

Revenue retention

Revenue retention is how much of the recurring revenue from an existing customer base keeps coming in over time, without counting new sales. It is an umbrella measured two ways: gross (GRR), which counts only losses from churn and downgrades, and net (NRR), which adds expansion from within the base. Unlike customer retention, which counts logos, here what matters is the revenue in money.

Illustration of gross MRR churn: recurring revenue leaking from a subscription base through cancellations and downgrades.

Gross MRR churn

Gross MRR churn is the percentage of recurring MRR a company loses to cancellations and downgrades in a period, with no expansion subtracted. It is always positive and never exceeds 100%, because it measures only the revenue leaking out of the existing base. It works as the worst case of retention: how much the company would lose if it recovered nothing in return.

Illustration of net MRR churn: revenue losses minus base expansion resulting in the net balance.

Net MRR churn

Net MRR churn is the recurring revenue lost to cancellations and downgrades, minus the expansion generated by the same base in the same period, all over the MRR at the start of the period. Unlike gross churn, it subtracts expansion, so it can go negative when the customers who stay grow more than the ones who leave, what is called negative churn.

Illustration of customer churn: accounts leaving the base of a SaaS company over a period.

Customer churn

Customer churn (or logo churn) is the percentage of customers or accounts that cancel in a period, counted by number of logos rather than by revenue. It tells you how many companies you lost, regardless of how much each one paid. It differs from revenue churn when those who cancel pay above or below your average deal.

Illustration of the retention rate: a group of customers that stays active at the end of a period while a few leave.

Retention rate

The retention rate is the percentage of customers or revenue that stays active at the end of a period. It is the direct complement of churn: if the annual customer churn rate is 8%, customer retention is 92%. It measures the loyalty of the base and helps forecast future recurring revenue.

Illustration of logo retention: a cohort of customer logos at the start of the year and how many remain at the end.

Logo retention

Logo retention is the percentage of accounts (logos) a SaaS company keeps over a period, without looking at how much each one pays. It is the mirror of customer churn: it counts heads, not revenue. That is why it can diverge sharply from revenue retention when a few large customers concentrate the MRR.

Illustration of voluntary churn: a customer who actively decides to cancel the subscription.

Voluntary churn

Voluntary churn happens when a customer actively decides to cancel the subscription, driven by price, low perceived value, a change of need or competition. It is the opposite of involuntary churn, which comes from payment failures. You fight it with activation, delivered value and product, not with billing.

Illustration of involuntary churn: a declined credit card dropping a subscription without the customer deciding to leave.

Involuntary churn

Involuntary churn is the cancellation of a subscription caused by a payment failure, such as a declined, expired or maxed-out card, rather than a customer decision. It usually accounts for a meaningful slice of total churn and is highly recoverable with dunning, that is, payment retries and requests to update the card.

Illustration of a customer health score: a dashboard sorting customers into green, yellow and red by health.

Customer health score

A customer health score is a composite score that estimates the health and risk of each customer by combining signals of product usage, engagement, support and payment. It exists to act before churn and to prioritize the accounts with the most value at risk. It is not a magic number, but a method to turn scattered signals into a single, actionable reading.

Illustration of customer lifetime: a timeline showing how long, on average, a customer stays active.

Customer lifetime

Customer lifetime is the average time a customer stays active and paying for a SaaS. It is estimated simply as 1 divided by the churn rate: with 2% monthly churn, the average lifetime lands around 50 months. It is the base of LTV, because the longer a customer stays, the more revenue they generate before they cancel.