Churn Rate
CRM & RetentionAlso: Customer Churn · Attrition Rate · Logo Churn
Quick definition
Churn rate is the percentage of customers who stop doing business with you over a given period. Calculated as the number of customers lost divided by the number you started with, expressed as a percentage. High churn erodes lifetime value (LTV) and makes growth expensive.
Monthly churn annualises fast. A monthly rate that looks small becomes a significant annual loss. Compare against your new-customer growth rate to see whether the base is actually growing.
How it varies across Australia
Churn rates vary sharply by industry and business model. Subscription businesses in competitive consumer categories tend to run higher monthly churn than B2B SaaS. The shape of churn matters as much as the headline number: early-cohort churn points to onboarding problems, late-cohort churn points to product or price problems.
See retention patterns across Australian industries →What it actually means
Every business loses customers. The question is how fast, and whether the rate is slow enough to allow net growth on top.
Churn is the leak in the bucket. You can pour acquisition spend in at the top all day, but if the hole at the bottom is large enough, the bucket stays empty. The uncomfortable maths: at high monthly churn, a customer base can halve in under a year even while new customers are arriving at a healthy clip.
The number that matters most isn't the headline churn rate. It's the cohort shape. Are customers leaving in month one (an onboarding problem)? Month six (a value problem)? Month twelve (a competitive problem)? The same headline churn rate tells a completely different story depending on when in the customer lifecycle the leaving happens.
Churn also comes in two flavours that most teams confuse. Logo churn counts the number of customers who leave. Revenue churn counts the revenue those customers represented. A business that loses small customers but keeps large ones can have high logo churn and low revenue churn. Report both.
Churn compounds the same way growth does. The difference is which direction you're heading.
How to calculate it
Churn Rate = Customers lost in period ÷ Customers at start of period × 100
Worked example. You started July with 480 customers. During July, 24 cancelled. Churn rate = 24 ÷ 480 × 100 = 5%. At that rate, without new customers, the base would halve in roughly 14 months.
The Australian context
Australian subscription businesses have faced elevated churn pressure since the 2022 rate cycle as consumers and businesses tightened discretionary spend. Businesses that built retention programmes before the cost-of-living squeeze held up better than those relying on sticky products alone.
The Australian Consumer Law also shapes churn mechanics. Subscription cancellation must be as easy as signup under consumer protection rules, which means dark-pattern retention tactics carry legal as well as reputational risk. Build retention through value, not friction.
Where people get this wrong
Related terms
Common questions
What is a good churn rate for an Australian subscription business?
It depends on the model and the price point. Consumer subscriptions with monthly billing tend to run higher than annual B2B contracts. The more useful question is whether your churn rate allows net positive growth once new customer acquisition is added. If churn is outpacing acquisition, the absolute rate is already too high.
What is the difference between churn rate and retention rate?
They are the mirror of each other. If churn rate is the percentage who leave, retention rate is the percentage who stay. Churn rate of 5% means a retention rate of 95%. Both describe the same dynamic. Which one you report depends on whether you want to highlight the loss or the hold.
How does churn affect lifetime value?
Directly. LTV is calculated using average customer lifetime, which is the inverse of churn rate. Lower churn extends the lifetime, which multiplies the revenue each customer generates. Reducing churn is one of the most direct ways to grow LTV without changing price or purchase frequency.
Should I measure churn monthly or annually?
Measure monthly, report in the context of annualised impact. Monthly gives you a signal fast enough to act on. Annualised gives the board a number that shows the business consequence. A rolling three-month average smooths seasonal noise without hiding real trends.
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New Rebellion is a marketing intelligence consultancy. We build tools, score Australian businesses on how their marketing actually performs, and publish Debrief every day. This dictionary is part of how we work in the open.
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