B2B SaaS Fundamentals
What is Churn Rate?
Churn Rate is the percentage of customers (or revenue) a company loses over a given period, typically measured monthly or annually — a core health metric for any subscription business.
Who Is It For?
Churn is tracked by RevOps and customer success teams, and watched closely by CMOs and executives since it directly affects how much new revenue is needed just to stay flat.
How Is It Used?
Churn rate is used to gauge product-market fit and customer health, and to model how much new revenue a company needs to generate just to offset losses.
- Calculate customer churn (accounts lost) and revenue churn (dollars lost) separately, since they can tell different stories
- Segment churn by cohort, plan tier, or acquisition channel to find patterns
- Compare gross churn to net revenue retention, which nets out expansion revenue
- Use churn trends to prioritize retention investment over pure acquisition spend
Related Terms & Concepts
Frequently Asked Questions
What’s a good churn rate for B2B SaaS?
It varies by segment, but many SMB-focused B2B SaaS companies target annual churn under 10-15%, while mid-market and enterprise products often aim well below that given larger, stickier contracts.
What’s the difference between churn rate and net revenue retention?
Churn rate measures what’s lost; net revenue retention nets losses against expansion revenue from existing customers, so a company can have real churn and still show NRR above 100% if upsells outpace losses.
