← Business Metric: Operational (all topics)
Churn & retention
What it is
The proportion of customers or revenue lost in a period. Net revenue retention nets expansion within retained accounts against losses, and can exceed 100% where existing customers spend more
It is the central metric in subscription, telecom, insurance and service businesses
Impact on industries
- Retention compounds - a small improvement in churn transforms lifetime value and reduces the acquisition spend needed to grow
- Net revenue retention above 100% means the business grows even without winning a single new customer
- Churn is a lagging indicator, reflecting a service or pricing failure that occurred earlier and is expensive to reverse
- Customer churn and revenue churn can move in opposite directions, so which is reported matters as much as the level