In discussions about customer churn, you may come across the term revenue churn.
These concepts are related, but they measure different aspects of business loss.
Customer churn
Customer churn is the percentage of customers who stop using your product or service over a given period.
Revenue churn
Revenue churn represents the percentage of lost revenue due to cancellations, downgrades, or reduced spending.
While distinct, customer churn and revenue churn are deeply connected. High customer churn leads to revenue churn—fewer customers mean less revenue. Conversely, retaining customers helps grow your revenue base.
Here’s why churn is critical to your bottom line:
- A high customer churn rate shrinks your revenue. Left unchecked, it can push a profitable business into decline.
- Monitoring churn can help you identify issues in your product, service, or processes before they lead to larger revenue losses.
Take, for instance, onboarding. A high churn rate linked to incomplete onboarding tasks signals the need to revisit your onboarding process. Similarly, frequent churn among customers facing recurring support issues is an insight to improve your customer support or tackle root problems in your product.