How to calculate churn rate in 5 easy steps [definition + formula]

How to calculate churn rate in 5 easy steps [definition + formula]

Updated: 09/09/25

As a bass player in a touring band, I've felt the high of playing to a sold-out room, and I've felt the humbling sting of standing on stage in front of a crowd consisting of the bartender and our manager, JT (shoutout, JT). The worst pain of all, though, is coming back to a city and realizing we sold fewer tickets than last time. Wow, I didn't like admitting that.

That's customer churn.

For my band, churn means fans who used to buy tickets no longer do, a drop in our average monthly listeners, or t-shirts not flying off our merch table like they used to. Customer churn is a reality for all businesses. It'll never be zero, but the goal is to reduce churn as much as possible and outpace it by growing and delighting your customer base.

If I hadn't kept track of the tickets we sold in each city, I wouldn't have realized we were losing fans. However, calculating customer churn is a bit more involved than simply comparing this month to last, but don't worry.

In this article, I'll review everything you need to know about churn rate: what it is, how to calculate it, and what to do if the number isn't what you hoped for.

Table of Contents

• What is customer churn rate?
• Benefits of Knowing Your Churn Rate
• Churn Rate Formula
• How to Calculate Churn Rate
• Steps to Take After Calculating Churn Rate
• Churn Rate Examples
• Common Churn Rate Questions

The churn rate is usually expressed as a percentage and measured monthly or annually. For example, if I have 100 customers at the beginning of a month and I lose five by the end, that's a 5% monthly churn rate. I'll dive deeper into that calculation later on.

Customer churn rate originated as a metric in subscription-based companies. Think telecom and SaaS, where monthly recurring revenue is gospel. Any business with repeat customers can experience churn, although it may appear in a slightly different form.

For my band, our fans don't pay a monthly subscription to hear our music. However, that doesn't mean customer churn isn't a concern of mine. It appears as unsubscribes from our mailing list, loss of followers on social media, or fans who attend one concert and don't return.

Customer churn rate tells a story, and oftentimes it's not one you want to hear. For me, it meant my band had been neglecting social media and waiting too long between releases. Whatever the case may be, churn is a warning light that something needs attention.

Pro tip: Use a CRM as your customer database. It helps you track churn and spot trends before they become serious problems.

Benefits of Knowing Your Churn Rate

1. Identifying Areas for Improvement

Your churn rate is like a blacklight. It reveals the parts of your business that aren't working, even if everything looks fine on the surface. If customers are dropping off, there's something you've got to fix. Tracking churn helps you pinpoint which products, services, or strategies aren't serving the business and meeting customer needs.

When I started tracking churn rate for my band, I noticed certain cities were falling off. Fans who used to buy tickets and open emails were no longer showing up. That data told me exactly where we needed to focus.

Pro tip: Track churn rate on both a monthly and annual basis to get a holistic view of your business's health. Monthly churn reflects the impact of short-term strategy changes, while annual churn helps you spot long-term trends.

2. Forecasting Future Revenue

Understanding churn rate makes planning for the future possible. For a SaaS business, your existing customer base is the foundation for future revenue. You know how much each customer pays per month, but churn rate helps you anticipate the recurring revenue you can expect to lose.

That's crucial information when it comes to planning hiring, understanding customer lifetime value, and deciding to what extent you want to focus on customer retention vs. growth.

It's also important to remember that churn compounds. For instance, a monthly churn rate of 5% is more significant than it may seem. Over a year, that adds up to almost half of your customers dropping off, which impacts future growth projections.

Even for non-subscription businesses like mine, understanding churn and customer retention patterns helps forecast revenue. For example, I know that a certain number of my band's NYC fans won't be able to make it to the next show, even if they attended the last one. That's why we continue to promote our shows, release new music, and strive to acquire new fans. Outpacing churn is the only way to grow.

Pro tip: HubSpot's Analytics and Dashboard software enables you to create custom reports that track your entire customer lifecycle, including churn, which you can layer into your forecasting.

3. Improving Customer Loyalty

Keeping an eye on customer churn helps you build customer loyalty by putting the spotlight on customer health. If you notice an uptick in your churn rate, that's a dead giveaway that something is wrong. The sooner you identify it, the faster you can fix it, making for a smoother customer experience.

Just knowing your churn rate alone isn't what fosters customer loyalty; what it reveals does. When you consistently monitor your churn rate, you can identify patterns of friction that cause customers to leave. It could be confusing onboarding, unhelpful support, or unmet needs. Whatever it is, tracking churn lets you spot it and squash it early before it snowballs.

Building loyalty means listening to your customers and consistently acting in their best interest, and tracking churn keeps you locked in on their needs.

Pro tip: Customer feedback provides essential context for your churn rate. Use surveys, customer interviews, and support ticket analysis to understand why customers are leaving and what you can do to fix it.

4. Enhancing Marketing Strategies

Your marketing strategies are a natural byproduct of customer loyalty. Churn doesn't just reveal how to retain customers, but also how to attract new ones in the future.

Customer loyalty is about building trust and consistently meeting customer needs. Your marketing strategy, on the other hand, is about communicating your value proposition to future customers and positioning your product or service as the solution that fulfills those needs.

When you analyze churn, you can start to understand what your customers expected, what you delivered, and where you may have fallen short. These are powerful insights that speak to what your customers care about, and that's precisely what you should be aiming for in your marketing communications.

Pro tip: Compare churn rates across customer acquisition channels. If customers from a specific campaign or platform are churning at a higher rate, your messaging may be targeting the wrong audience or setting unrealistic expectations.

5. Prioritizing Customer Success

Customer loyalty speaks to an emotional connection, while customer success relates to the more practical side of customer relationships. The question is, are customers getting value from your product/service and succeeding in reaching their goals?

Customer churn lets you zoom in on both. Regarding customer success, churn sheds light on the reasons why your customers may not be seeing the value they expected. Maybe support is falling short, documentation is confusing, or the product just isn't the right fit. There are a lot of factors that impact customer success, and tracking churn helps you figure out where attention is required.

Pro tip: Examine your customer journey map and identify where churn tends to happen most.

If that math is as intimidating to you as it is for me, you can use a tool that automatically calculates churn rate.

Featured Tool: Churn Rate Calculator

Download it now for free and follow along to determine your own business's churn and retention rates.

HubSpot's Customer Service Metrics Calculator calculates both revenue churn and customer retention rate, in addition to eight other imperative customer success metrics.

If you want to calculate your churn rate manually, read on for an explanation and an example of how to calculate this metric.

Remember, the steps to calculate churn rate are:

1. Determine a time period: monthly, annual, or quarterly.

2. Determine the number of customers you had at the beginning of the time period.

3. Determine the number of customers who churned by the end of the time period.

4. Divide the number of lost customers by the number of customers you had prior to the churn.

5. Multiply that number by 100.

As an example, let's say your software company had 500 customers at the beginning of last quarter.

However, you also lost 50 customers due to expired contracts and a few poor customer service interactions.

This would mean your customer churn rate would be 50 divided by 500, which is 0.10.

Multiplied by 100, this gives you a customer churn rate of 10% for the quarter.

Here's how it looks when you do the math out:

Customer Churn Rate = (Lost Customers ÷ Total Customers at the Start of Time Period) x 100

Customer Churn Rate = (50 ÷ 500) x 100Customer Churn Rate = (0.10) x 100Customer Churn Rate = 10%

Now that you've found out what your churn rate is, you're probably wondering what you should do next - especially if your churn rate is high. Take a look at the next section for some best practices that can help you decrease churn for your business.

Steps to Take After Calculating Churn Rate

So, you've run the numbers, and your churn rate is a little higher than you hoped. I've been there.

For me, it was seeing lower turnout in cities where we used to pack the house. Did it hurt my pride? Absolutely. But after licking my wounds, I realized the churn wasn't a death sentence. Instead it was valuable feedback that I needed to pay attention to.

Once you've determined your churn rate, the next phase is to turn that number into actionable insights and fuel for building strategies and systems to retain customers. Below are some proven techniques for combating churn and enhancing customer retention.

1. Analyze churn to improve your customer service team.

Before I became a professional musician, I worked as a support rep at HubSpot. During my support days, I experienced firsthand both sides of the churn equation. Sometimes, support reps are the last line of defense against churn. It was often up to me to satisfy and assuage a customer who was about to walk away. It's a lot of pressure, and if things don't go well, a poor support experience can be the final straw.

All of this is to say that support teams react to churn and sometimes cause it. A high churn rate may be an indicator that your support practices require some review. If customers are experiencing high wait times and receiving inconsistent, unempathetic answers from reps, that could be a serious factor affecting your churn rate.

Pro tip: Analyzing support ticket data can provide necessary context for decoding your churn issues. Sometimes, the issue is the quality of the support itself, but often you can uncover other product or service issues by examining the details of support cases.

2. Revamp your onboarding plan for new customers.

One of the biggest culprits of early churn is customer onboarding that misses the mark. If customers don't understand how to use the product or don't get value from it quickly, they are more likely to churn early in their journey.

I've seen it firsthand during my time in customer support. New customers would sometimes reach out confused about the product's features and workflows, which can be frustrating and overwhelming when it's a product they just bought. Frustration right out of the gate makes for a significant customer retention roadblock.

That's why customer onboarding is critical, because it provides a solid foundation of knowledge and confidence using the product and interacting with your teams. Early momentum is key to long-term retention, and a strong onboarding experience sets customers up for success.

Revamping your onboarding plan can involve hiring a customer onboarding specialist for early training, or investing in educational content and resources, ensuring your customers always know where to turn when they have questions.

Pro tip: Analyze your churn rate within the first 30, 60, or 90 days of the customer journey. If most of your dropoff occurs there, you probably need to rethink the onboarding experience.

Download our free customer onboarding templates and get a customer intake form, a welcome packet, and more.

3. Invest in more training for support and sales reps.

As a former customer support rep at HubSpot, I can tell you that proper training is the first step towards customer success and preventing churn. When I started, training was intense. It felt like I was back in college. I took crash courses on the product, ran mock calls, and was shadowed through my first live interactions.

I'm glad my training at HubSpot was so thorough. It gave me a solid foundation of product knowledge, confidence, and customer empathy, which are essential for delivering top-quality support. As a support rep, I spoke with many frustrated customers, many of whom were threatening to churn. If I hadn't had the knowledge and skills to de-escalate those situations and provide answers, they might have walked away.

Training is also crucial for sales representatives. They are the ones who set customer expectations from the very beginning. If they overpromise or misrepresent the product, no amount of support can save customers from disappointment.

Download our free support training template to build a thorough training and onboarding plan for your new support hires.

4. Ask for feedback at key moments - and respond promptly.

One thing I learned in support is that when customers are unhappy, they won't always tell you directly. It's up to you to ask for feedback and address concerns quickly.

I recommend reaching out after major milestones, like onboarding, new purchase, or upgrade. It's also smart to monitor behaviors that signal churn risk. For example, if a customer hasn't logged on to the product in a month, a simple check-in can uncover issues and get them back on track.

Collecting feedback is important, but it doesn't mean anything if you don't act on it. During my time in support, customers would sometimes submit feature requests and report bugs. It was always gratifying (for both me and the customer) when I could follow up and let them know that their feedback had led to a change.

Pro tip: Use customer feedback software to send out automated surveys and analyze the data at scale.

Download our free review response templates to respond to negative reviews appropriately and increase your chances of retaining and delighting that customer.

5. Communicate proactively with customers.

If you only reach out when something goes wrong or you're pushing an upsell, customers will notice. In my experience, customers want to know that you're genuinely invested in their success, and proactive communication is one of the best ways to show it.

That means reaching out with value rather than making requests. That could mean sharing helpful content, exciting updates, and just a thoughtful check-in after a milestone for their business. Touchpoints like this help strengthen the customer relationship and reduce churn.

I've witnessed the power of proactive communication both at HubSpot and with my band. When we stay in touch with fans, I've discovered that it's crucial to share updates and make them feel like they are part of our story. If we only reach out to fans when we want to sell tickets, they are less likely to feel emotionally connected and show up next time.

Pro tip: Have your customer success teams routinely check in on customers. It could be monthly or quarterly, but the important thing is to maintain customer retention by reminding them that you are paying attention to their needs.

6. Offer exclusive perks to existing customers.

Perks and incentives aren't just for soliciting surveys and smoothing things over with frustrated customers. When done right, they're a powerful tool for deepening customer loyalty and reducing churn. Even something as small as a surprise discount, a handwritten note, or a free piece of branded merchandise can go a long way in making customers feel valued.

You don't have to roll out a comprehensive loyalty program (unless you're in retail, where it can work wonders). But, incorporating small moments of delight into the customer journey is a simple yet effective way to build trust and turn customers into long-term advocates.

We do this in my band by sharing demos and behind-the-scenes content with our most dedicated fans. After shows, we always hang out at the merch table to sign t-shirts, take selfies, and connect with fans. Overall, these are small gestures, but they make a significant impact on making fans feel emotionally connected, which keeps them coming back.

Pro tip: If you're a small business, have your CEO personally reach out to your top customers. It makes customers feel seen and provides a strong moment for collecting feedback.

7. Leverage feedback from free trial customers.

Free trial customers who don't sign up can provide valuable insight into churn, without incurring lost revenue. Send out an automated survey at the end of your free trial period to learn what they liked about your product and what prevented them from making a purchase.

When I do a free trial of a product, I expect a survey at the end.

Pair these tips with customer retention strategies to lower churn rate.

Now, you might be wondering: what does churn rate look like in real life, for real companies? Let's take a look at some well-known examples.

Churn Rate Examples

Many SaaS companies, particularly in the B2C space, publish their churn rates to demonstrate their ability to retain customers. Check out these examples to guide your understanding of your churn rate and its position on the spectrum.

Netflix: 2% Monthly Churn Rate

Source

Netflix is a powerhouse in the streaming industry, boasting an unrivaled churn rate that consistently hovers around 2%. Combined with record-setting subscriber growth, Netflix is setting the gold standard for customer retention.

Despite a recent price hike and the inclusion of ads on the lowest-tier subscription, customers are sticking around. But why? I mean, I'm watching season 3 of Squid Games, with ads, and I'm not even mad about it.

Part of it has to do with Netflix's status as the legacy streaming service, but it also just comes down to value. Netflix consistently offers great content, a vast library, smart recommendations, a great user experience, and a price that customers agree with.

Disney+: 3% Monthly Churn Rate

Disney+ has made impressive strides in reducing churn. As of April 2025, Disney reported a 3% churn rate, which is an improvement of nearly 2% over the previous year.

Part of this success comes from building content offerings through integration with Hulu, ESPN, and MAX, aiming to provide value and keep subscribers satisfied.

However, their most recent churn-squashing initiative came in the form of a new program called Disney+ Perks. New for 2025, the program offers subscriber-only discounts and opportunities to win exclusive perks, including a vacation to Disneyland.

I think it's a brilliant move for them to add a loyalty program-like component to the streaming experience. Leveraging the broader Disney ecosystem (like its theme parks) deepens emotional connections for customers and encourages them to stick around.

Spotify: 2% Monthly Churn Rate

The only streaming service that can compete with Netflix in terms of loyalty isn't even a video platform. It's Spotify. With a monthly churn rate also hovering around 2%, Spotify has best-in-class customer retention, but what makes it so sticky?

First, Spotify has a library of basically every song or podcast ever. Unlike Netflix, they don't have to compete with exclusive content. However, things may be starting to change. Some artists have recently pulled their catalogs from the platform in protest of CEO Daniel Ek's recent investments in military tech. Whether this sparks a wave of churn remains to be seen.

Additionally, leaving the platform can come with significant costs, which helps tamp down churn. Most users have built up extensive libraries of playlists and favorited songs over the years, so moving to a competitor can be a painful experience.

Apple TV+: 7% Monthly Churn Rate

Source

According to Yahoo Finance, Apple TV+ has one of the highest churn rates among major streaming platforms (second only to Starz) with a whopping 7%. That might not sound like a lot, but in the streaming world, it's high.

Unlike Netflix and Hulu, which offer vast libraries of content, Apple TV+'s content offerings are limited and curated. While their original content is often highly acclaimed, the limited quantity may not justify long-term subscribership.

Apple TV+ hasn't publicly stated why it experiences such significant churn, but what I can tell you is this: I subscribed, binged Ted Lasso and Severance, and then canceled.

Common Churn Rate Questions

What is a good churn rate?

A reasonable churn rate is dependent on your industry, but of course, the lower the better.

According to The SaaS Playbook by Rob Walling:

• Over 10% monthly churn is an emergency.
• 4-5% monthly churn is acceptable.
• 2-3% monthly churn is excellent.

There are also churn benchmarks within the SaaS industry itself. Enterprise SaaS companies with huge B2B contracts often target 1% monthly churn rate or lower. That sounds crazy low, but it makes sense when you consider lengthy contracts and high switching costs.

Take a company like Salesforce. Their churn data isn't publicly available, but switching costs for such platforms are astronomical at enterprise scale.

When I worked in HubSpot Support, our entire ticketing system (along with many other internal systems) was built on Salesforce. Switching to a different platform would have required months or years of data migration and retraining. I think HubSpot has since moved to a custom-built, in-house solution, but you get the point.

SaaS companies that serve small businesses or individuals can expect higher churn rates, averaging around 6-7%, due to more prevalent competition and lower switching costs.

What is annual churn rate?

Annual churn rate is the percentage of customers (or fans, in the case of my band) that you lose over a year. It provides a high-level view of long-term customer loyalty, and calculating it is as simple as comparing the number of customers you had at the beginning of the year to the end of the year.

Example: Juice Band Annual Listener Churn

Above is a chart from Spotify for Artists plotting my band's daily listenership on the platform over the course of a year. In the past year, we've had 717,796 unique listeners, which is unfortunately down from 981,663 listeners the year prior. The difference accounts for a 26.9% annual churn. Ouch.

Of course, listeners aren't the same thing as paying customers, but the example still stands. We released an EP in 2024, which explains the higher listenership last year. Momentum fades, so if you're not releasing new music, launching new products, or engaging with your audience, you can expect some churn. We've got a new album coming soon-ish, so I'll keep you posted on the numbers. Wish me luck!

Calculation:

Here's the formula for annual churn rate:

((Starting Customers - Ending Customers) ÷ Starting Customers) x 100

Let's say you have 1000 customers at the start of the year and you end the year with 800 customers. The calculation is as follows:

(1000 - 800) ÷ 1,000 x 100 = 20%

Annual Churn Rate = 20%

Pro tip: Even if your overall customer base grows, annual churn can still tell you how well you are retaining your original customers, which is key to long-term business health.

What is monthly churn rate?

Monthly churn rate is the percentage of customers (or fans) you lose each month. Annual churn shows you the big picture, while monthly churn zooms in on short-term retention.

Example: Juice Band Monthly Listener Churn

Let's check out my band's Spotify numbers again, but this time over a month. In July of 2025, our monthly listenership dropped 1.1%, from 134,486 to 132,952. We still haven't released new music, which explains the dip, but we've been engaging with fans more on socials, so we slightly mitigated churn compared to previous months.

Calculation:

Here's the formula for monthly churn rate:

((Starting Customers - Ending Customers) ÷ Starting Customers) x 100

Let's say you have 1000 customers at the start of the month and you end the month with 980. The calculation is as follows:

(1000 - 980) ÷ 1,000 x 100 = 2%

Monthly Churn Rate = 2%

Pro tip: Even a small monthly churn rate can add up quickly. A 2% monthly churn rate compounds to around 22% annually, which is why keeping monthly churn low and acquiring new customers is so important.

Note: In both this example and the annual one, I've been comparing total listeners month-over-month, rather than tracking individual returning listeners. Unfortunately, I don't have access to Spotify individual user-level data, which would be required to calculate a true monthly or annual churn rate. However, these examples still illustrate audience fluctuation over time, and you can use the same basic calculation to surface similar trends over time.

What is revenue churn rate?

Revenue churn rate measures the amount of revenue your business loses over time due to churn, downgrades, or non-renewals. Customer churn tells you how many people left, while revenue churn puts a dollar amount on it.

Revenue churn is an essential metric for contextualizing customer churn. You could lose a single high-paying enterprise customer without significantly impacting your customer churn. However, your revenue churn would tell a different story.

I've felt the impact of revenue churn firsthand with my band. We used to play an annual gig at a college in the Northeast. If there's one thing you need to know about college gigs, it's that they pay well. When that gig unfortunately dried up, it wasn't like an entire tour got cancelled, and losing that one show didn't shrink our fanbase, but the impact on our finances was significant. That's revenue churn.

How do I calculate revenue churn rate?

To calculate revenue churn rate, you need to know the revenue lost due to customer churn and the total revenue generated by your business during a specific period. Divide the revenue lost due to customer churn by the total revenue generated. Then, multiply that number by 100 to get a percentage. Here's the formula:

Revenue churn rate = (Revenue lost due to customer churn / Total revenue generated) x 100

As an example, let's say your company generated $1 million in revenue in a month, and during that month, lost $100,000 due to customer churn. You would calculate revenue churn rate as follows:

Revenue Churn Rate = (100,000 ÷ 1,000,000) x 100

Revenue Churn Rate = (0.10) x 100

Revenue Churn Rate = 10%

What's the difference between customer churn rate and revenue churn rate?

Customer churn rate measures the percentage of customers who have stopped using your product or service, while revenue churn rate measures the percentage of revenue that has been lost due to customer churn.

Though customer churn rate and revenue churn rate are related, it's imperative to differentiate them because their results can mean very different things, especially for SaaS companies with multiple product tiers.

For example, suppose you notice a high customer churn rate but a low revenue churn rate. In that case, it might indicate that customers are downsizing to a lower-tier product rather than leaving altogether. On the other hand, if the revenue churn rate is high but the customer churn rate is low, it may indicate that the business is losing its largest customers.

By understanding both metrics, your business can take corrective action to improve customer retention rates and reduce churn, while also protecting your revenue streams.

How can I track churn?

There are many ways to track churn. Some people prefer to keep it simple with a spreadsheet, using manual data imports and charts. You can also use automation tools like Coefficient to import data into Google Sheets or Excel for streamlined reporting.

Personally, I prefer a more hands-off, robust solution that can do all the legwork behind the scenes. Tools like HubSpot's reporting dashboard software can integrate with your CRM to track and calculate churn automatically, no spreadsheets required.

What is the difference between attrition and churn?

Churn and attrition are often used interchangeably, but I don't consider them to be the same thing.

In my experience, churn refers to active cancellations. Customers who are upset with a product or service, or no longer see the value, decide to leave. I saw plenty of cases like this during my time in customer support. Churn is no accident. When a customer knows they are done, they cancel with purpose.

Attrition, on the other hand, is a passive process. Sometimes, people quietly fade away. With my band, some fans might gradually decrease their listenership and attend fewer shows over time. Not because they suddenly dislike our music, but because life gets in the way. There's no conscious moment when they decide to stop listening; they just gradually disengage. In my opinion, that's attrition.

In SaaS, attrition can also appear as involuntary churn. Involuntary churn is customers who leave without doing so on purpose. Usually, that means expired credit cards or forgetting to renew. It's not on purpose, but it certainly affects your bottom line.

Calculate churn rate to reduce customer turnover.

Customer churn is an unfortunate reality of doing business. Coming to terms with once loyal customers (or fans) who've left is never easy. Writing this article forced me to confront some unsavory truths about the health of my band and my business, but it's necessary work, and I know what has to be done.

Calculating churn might be a tedious task, but it's critical to understanding why customers aren't sticking with you for the long haul. Once you know your churn number, the work has just begun. Think of churn rate as your business's check engine light. It's a signal to open the hood and find out what needs fixing. It could be your onboarding, your customer support, or a misalignment of marketing and customer experience. Whatever it is, churn is trying to tell you something, and it's your job to listen.

Editor's note: This post was originally published in January 2018 and has been updated for comprehensiveness.

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