If you're running a business, you need to keep an eye on the churn rate. Churn rate refers to the percentage of customers who stop using your product or service within a certain period and is a crucial indicator for business growth. It impacts financial metrics like recurring revenue, customer lifetime value, and customer acquisition cost.
The churn rate is calculated by dividing the number of customers who stopped using your product by the total number of customers during that time period. However, nuances like when to define a customer as churned need to be considered. Experts suggest that the benchmark range for SaaS churn rate is 5%-7% annually, but this can vary depending on a company's revenue growth.