Churn analytics
Churn is counted in the first month a customer pays nothing, and reported four ways: by logo, by dollar, by tenure, and by survival.
Also Churn rate · Logo churn · Dollar churn · Survival curve · Tenure at churn
Churn is recognized in the first month with zero MRR after a qualifying gap — MRR is held through the last active month, not truncated at the last invoice date. Churn is reported in four views: monthly logo and dollar rates, tenure at churn, calendar seasonality, and survival by tenure.
- Formula
logo churn = churned logos ÷ last month’s active logos · dollar churn = churned MRR ÷ last month’s MRR · survival = surviving ÷ observable, at each tenure- Unit
- % per month
- Bounded
- ≥ 0
- Defaults
- first-zero-month timing · 3-month window · churn_at_gap_start · seasonality flag at 2σ
- Biggest lever
- The reactivation window — the largest single lever on every churn figure
- Read with
- Pause, churn, and the reactivation window · Cohort retention · GRR
- Appears in
- Board deck · Renewal calendar · Diligence
- Switches
- 3 · 0 locked — see the choices
What it measures
“Churn rate” is four different measurements wearing one name, and the confusion between them is routine.
- Logo churn — what share of customers left. Democratic: every customer counts once.
- Dollar churn — what share of revenue left. Weighted: one large departure can exceed twenty small ones.
- Tenure at churn — how long customers lasted before leaving. Distinguishes an onboarding failure from a renewal failure.
- Survival — of customers observable at tenure k, how many were still active. The clearest view of when a business loses people.
Logo and dollar churn diverging is diagnostic, not contradictory. Low logo churn with high dollar churn means the business is losing few but large customers — a concentration problem. The reverse means it is shedding a long tail while holding its core.
How it is computed
Timing. MRR is held through the customer’s last active month; churn is recognized in the first zero month thereafter, subject to the pause rules in pause vs churn. A customer whose final invoice covers March churns in April, not March. This one-month convention matters when comparing figures across systems: an off-by-one convention shifts every cohort curve and every monthly rate.
Monthly rates. For each month: churned logos and churned MRR (the absolute value of churn movements), against the prior month’s active base and base MRR. Reporting both numerator and denominator, rather than only the ratio, lets a reader see when a rate moved because the base changed rather than because losses did.
Tenure at churn. For each churn event, the months between the customer’s cohort month and the churn month, with the MRR lost.
Seasonality. Churn events and lost MRR grouped by calendar month across all
years, so an annual renewal concentration becomes visible. A month exceeding the
mean by more than churn_seasonality_sigma standard deviations is flagged.
Seasonality is expected in businesses with January or fiscal-year-end renewal
cycles; its absence in such a business is the anomaly.
Survival. For each tenure k, count the customers whose cohort month plus k falls at or before the data cutoff (observable), and how many of those had MRR above zero at that point (surviving). Restricting the denominator to observable customers is what makes the curve honest: a customer acquired two months before the cutoff simply cannot inform month-24 survival, and including them as failures would manufacture a decay that is really just missing time.
Worked example
A cohort of ten customers acquired in January, at a June cutoff:
| Tenure | Observable | Surviving | Rate |
|---|---|---|---|
| 0 | 10 | 10 | 100% |
| 1 | 10 | 9 | 90% |
| 2 | 10 | 9 | 90% |
| 3 | 10 | 7 | 70% |
| 4 | 10 | 7 | 70% |
| 5 | 10 | 7 | 70% |
Concentrated loss at months 1 and 3, then a flat curve — a business losing customers during onboarding rather than at renewal, which points at implementation rather than at product value or price. A single blended “30% churn” figure would have carried none of that.
The choices that change the number
- The reactivation window decides whether a gap is churn at all — the single largest lever on every figure on this page.
trailing_gap_policydecides how customers silent at the cutoff are treated. Under the conservative default they count as churned, which makes the most recent months look worse; the alternative makes them look better and can conceal a genuine deterioration in the final periods.- Churn timing convention. First-zero-month (this standard) versus last-active-month shifts every rate by one period.
- Logo counting after entity resolution. Whether a subsidiary’s departure is a churned logo depends on where the parent boundary was drawn — see the measured unit.
How it is misread
Annualizing monthly churn linearly. Multiplying a monthly rate by twelve overstates annual churn; compounding is the correct arithmetic, and even that assumes a constant hazard rate the survival curve usually contradicts.
Blending logo and dollar churn. They answer different questions and should never be averaged or quoted interchangeably.
Survival curves computed on all customers rather than observable ones. Produces a manufactured cliff at the right edge of the curve.
Reading the final month or two as a trend. Right-censoring bites hardest there; the trailing-gap policy is doing visible work in those periods, and every affected customer should be read from the register by name.
What it cannot tell you
Customer-level revenue data records that a customer stopped paying. It cannot record why — voluntary versus involuntary (payment failure), competitive loss versus budget cut versus acquisition of the customer itself. That split requires churn-reason codes or CRM data joined deliberately, and no amount of care with the revenue file will substitute for it.
How to state it
A disclosure that travels with the number. Replace the braces; keep the parenthesis.
Logo churn {x}% · dollar churn {y}% per month (SoF Standard v1.0: first-zero-month · 3-month window · numerator and denominator shown) Before you quote it
- Logo and dollar reported separately?
- Annualized by compounding, not by twelve?
- Numerator and denominator shown with the rate?
- Final months read with the trailing-gap policy in mind?
Related questions
- In which month is churn recognized?
- In the first month with zero MRR after the customer's last active month, subject to the pause rules. A customer whose final invoice covers March churns in April, not March. The convention matters because an off-by-one shifts every cohort curve and every monthly rate when figures are compared across systems.
- Logo churn or revenue churn: which should I report?
- Both, and never blended. Logo churn counts every customer once; dollar churn weights by revenue. Low logo churn with high dollar churn means a few large customers left; the reverse means a long tail is shedding while the core holds. Either alone invites the wrong conclusion.
- What denominator does the churn rate use?
- The prior month's active customers and their MRR, with the numerator being the churn movements recognized in the month. Both are reported alongside the ratio, so a reader can see when a rate moved because the base changed rather than because losses did.
- Can monthly churn be annualized by multiplying by twelve?
- No. Linear annualization overstates annual churn. Compounding is the correct arithmetic, and even compounding assumes a constant hazard rate that the survival curve usually contradicts, which is why survival by tenure is reported alongside the rate.
- What is negative churn?
- A base whose expansion exceeds its losses, so net revenue churn is below zero. It is a statement about NRR being above 100 percent, not about churn itself. Gross churn is still a positive number and should still be reported.
- What is a good churn rate?
- There is no arithmetic reference point for churn; any benchmark depends on segment, contract length and the definition used. Surveys such as Benchmarkit's and SaaS Capital's report medians by ARR band and ACV, each under its own definition. Compare only after matching the timing convention, the reactivation window and the logo-versus-dollar basis.
- Why report survival by tenure?
- Because a blended monthly rate hides when customers leave. Survival restricts the denominator to customers old enough to be observed at each tenure, so loss concentrated at months one and three (an onboarding failure) reads differently from loss at month twelve (a renewal failure).
Strategy of Finance. “Churn analytics.” SoF Standard Definitions v1.0 (2026-09-18). https://www.strategyoffinance.com/standards/churn-analytics/