Logo Churn

What is Logo Churn?

Churn is the enemy of any subscription company. Logo Churn, also called Customer Churn or Attrition, counts the number of customers who cancel or don't renew their subscription. This metric is often expressed as a percentage that describes the rate at which customers are churning.
Alternate names: Account Churn, Customer Churn

Benchmark

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

How to calculate Logo Churn

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

Favourable trend

Less is better

Level of complexity

Beginner

Date created: Feb 18, 2019

Latest update: Apr 16, 2019

Contributor:  Soha Yasrebi

Tell me 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.

What do others say?

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