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Logo Churn

Date created: Feb 19, 2019  •   Last updated: Apr 15, 2021

What is Logo Churn?

Logo Churn is the enemy of any subscription company. Logo Churn is the number or percentage of subscribers to a service that discontinue their subscription to that service in a given time period.

Alternate names: Account Churn, Customer Churn, Subscription Churn

Formula

ƒ Count(Churned Customers This Period) / (Total # of Customers at the Beginning of the Period)

Logo Churn

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What is a good Logo Churn benchmark?

For the SMB market, Logo Churn is typically between 3-7%. For mid-market, this number is 1-2%. A healthy customer base should not experience an average monthly churn of more than 3%.

Annual Logo Retention by ARR

Annual Logo Retention by ARR

OpenView, Sep 2019
Annual Logo Retention by Target Customer

Annual Logo Retention by Target Customer

OpenView, Sep 2019

More about this metric

In order for a company to expand its clients base, its growth rate (number of new customers) must exceed its churn rate (number of lost customers).

Customer Churn Rate is a critical KPI because (1) the cost of retaining a current customer is almost always less than attaining a new one, and (2) for businesses with recurring revenue models, keeping a customer can be worth hundreds and even thousands of dollars in future revenue (see Lifetime Value or LTV)

Logo Churn is almost aways analyzed along with MRR Churn rates. For example, a SaaS business might have monthly Logo Churn of 3%, but Net MRR Retention is still positive due to healthy MRR Expansion rates.

Due to the importance of keeping Customer Churn as low as possible, subscription based companies often have departments dedicated to engaging and improving relations with all customers, or re-activating lost customers.

This metric is interchangeable with Logo or Account Retention, which is simply the positive variation on churn. For example, 3% monthly Logo Churn, is the same as 97% monthly Account Retention.

Recommended resources related to Logo Churn

A great article by Lincoln Murphy on Churn and what's acceptable