Customer Churn Rate

Customer Churn Rate is the percentage of customers who stop buying within a given period. Computed as: (Customers lost during period / Customers at start of period) × 100. The inverse of retention rate. A 5% reduction in churn can lift profit by 25-95% (Bain & Co), making churn reduction the highest-leverage growth strategy after initial product-market fit.

Churn rate formula

Monthly churn rate = (Customers lost in month / Active customers at start of month) × 100. Annual churn rate = 1 − (1 − monthly churn)^12. Example: a medspa with 200 active clients losing 12 per month has 6% monthly churn = 52% annual churn. Most retention-focused SaaS targets <2% monthly churn.

Industry churn benchmarks

Typical monthly churn rates: coffee shops 8-12% (high natural turnover), gym 3-6%, retail 7-12%, ecommerce 10-15%, medspa 4-8%, dental 1-3% (longest retention), HVAC 5-10% (seasonal lumpiness). Always compare YOUR churn to your tier — coffee churn at 4% would be exceptional; dental churn at 4% would be a crisis.

How to reduce churn with wallet-first retention

Three highest-leverage moves: (1) wallet pass install at first transaction captures 60-80% vs <10% for apps — captured customers churn 3-5x less; (2) tier-calibrated reactivation triggers fire at the RIGHT cadence per industry (7 days for coffee, 60 for medspa, 365 for HVAC); (3) "Can't Lose Them" RFM segment gets personal outreach BEFORE they fully churn.