Churn Rate Formula: The Complete
Customer Churn & Retention Guide
Master the churn rate formula for subscriptions and ecommerce: customer churn, revenue churn, and how churn drives LTV and lifespan.
The Churn Rate Formula
Customer Lifespan = 1 ÷ Churn Rate (use decimal, same period)
Number who churned (cancelled, lapsed, or left) in the period.
Total eligible customers at the beginning of the same period.
Percentage that churned. Use 1 ÷ churn for average lifespan and LTV.
Quick Example
Start of month: 500 customers. During month: 25 churned.
Churn = (25 ÷ 500) × 100 = 5% monthly
Average customer lifespan = 1 ÷ 0.05 = 20 months. Use this in LTV = AOV × Frequency × Lifespan.
Understand Retention and LTV
StoreRadar helps you see who's at risk of churning and calculates LTV by segment so you can focus retention where it matters most.
Churn Rate Formula Variations
Customer churn, revenue churn, and lifespan
Count customers who left in the period. Start = beginning of period.
Includes cancellations and downgrades. Net churn subtracts expansion.
Use same period as churn (monthly churn → lifespan in months).
Retention + Churn = 100% (assuming no new in cohort).
Curve of churn over time; doesn't add new customers to cohort.
Worked Examples
Step-by-step churn and lifespan calculations
Monthly Customer Churn
Subscription business. Start of month: 1,200 customers. During month: 48 cancelled.
- 1 Customers at start = 1,200
- 2 Customers lost = 48
- 3 Churn Rate = (48 ÷ 1,200) × 100
- 4 Churn = 4% monthly
Monthly churn rate is 4%.
At 4% monthly churn, average customer lifespan = 1 ÷ 0.04 = 25 months. Annual churn ≈ 1 - (0.96)^12 ≈ 39%.
Customer Lifespan and LTV
Your annual churn rate is 25%. AOV $70, purchase frequency 2x/year. What's LTV?
- 1 Annual churn = 25% = 0.25
- 2 Lifespan = 1 ÷ 0.25 = 4 years
- 3 LTV = AOV × Frequency × Lifespan
- 4 LTV = $70 × 2 × 4 = $560
Customer lifespan is 4 years; LTV is $560.
Reducing churn to 20% would give lifespan 5 years and LTV $700—a 25% LTV increase from retention alone.
Revenue Churn (MRR)
Start of month MRR $85,000. Lost $4,250 from cancellations, $800 from downgrades. Gained $2,100 from upgrades.
- 1 Gross MRR churn = $4,250 + $800 = $5,050
- 2 Gross churn % = ($5,050 ÷ $85,000) × 100 = 5.9%
- 3 Net MRR churn = $5,050 - $2,100 = $2,950
- 4 Net churn % = ($2,950 ÷ $85,000) × 100 = 3.5%
Gross MRR churn 5.9%; net 3.5% after expansion.
Net churn is what actually reduces MRR. Negative net churn means expansion outweighs churn.
Ecommerce Lapsed Customers
Define 'active' as purchased in last 12 months. Start of year: 5,000 active. During year 1,800 had no purchase in next 12 months (lapsed).
- 1 Active at start = 5,000
- 2 Lapsed (churned) = 1,800
- 3 Churn = (1,800 ÷ 5,000) × 100 = 36%
- 4 Retention = 64%
36% of the cohort lapsed (no purchase in following 12 months).
Ecommerce 'churn' is often annual and based on repurchase windows. Use for LTV and retention campaigns.
Churn Benchmarks by Type
Typical ranges (your results will vary)
| Type | Typical Churn | Notes |
|---|---|---|
| SaaS (B2B) | 3% - 8% monthly | Varies by segment and contract length |
| SaaS (B2C) | 5% - 12% monthly | Often higher than B2B |
| Subscription box | 6% - 12% monthly | Skip/cancel is common |
| Ecommerce (12-mo lapse) | 50% - 80% annual | Many don't repurchase in 12 months |
| Media/Streaming | 3% - 6% monthly | Low switching cost |
How to Reduce Churn
Strategies that improve retention
Onboarding & Activation
Ensure customers see value early. First-use success reduces early churn.
Usage and Health Metrics
Track engagement; intervene when usage drops before they cancel.
Win-Back and Save Offers
Offers at cancellation or win-back emails for lapsed customers.
Customer Success (B2B)
Proactive check-ins, QBRs, and success plans for at-risk accounts.
Improve Product-Market Fit
Churn often reflects unmet expectations or wrong segment.
Loyalty and Retention Programs
Rewards, tiers, and benefits that increase switching cost.
Common Churn Mistakes
Errors that distort churn and lifespan
Mixing Time Periods
Using customers at start of year with churned count from one month, or mixing monthly and annual churn.
Use consistent period: same window for 'at start' and 'lost.' Label clearly (e.g. monthly vs annual churn).
Ignoring Cohort vs Blended
Blended churn (all customers) can hide that new cohorts churn faster or slower than mature ones.
Track cohort churn curves. Blended is useful for overall health; cohorts show true retention by vintage.
Counting New Customers in Churn
Including new signups in 'customers at start' when they haven't had time to churn yet.
Churn rate should use a defined cohort or 'customers at start of period' who could have churned in that period.
Confusing Revenue and Customer Churn
Reporting one when the other is more relevant (e.g. losing few high-value customers = high revenue churn).
Track both. Customer churn for count; revenue churn for MRR/ARR impact. Net revenue churn includes expansion.
How to Track Churn & Retention in WooCommerce
Three ways to monitor customer churn and retention for your WooCommerce store
Option 1: Spreadsheets
Export customer and order history to identify lapsed or churned customers manually. Requires defining an inactive window and repeated cohort analysis over time.
- Full control
- No additional cost
- Time-consuming
- Quickly outdated
- Complex cohort logic
Option 2: Google Analytics
GA4 can show some retention and user lifecycle metrics, but has limitations with logged-in customer identity and historical cohort churn over long periods.
- Free to use
- Some retention views
- Cookie-based
- Limited customer-level churn
- Complex setup
Option 3: StoreRadar
StoreRadar tracks repeat purchase behavior and retention by segment, so you can see who's at risk of churning and how churn affects LTV—all in real time.
- Automatic retention view
- Segment-level behavior
- Real-time updates
- LTV by cohort
- Monthly subscription
Related Formulas
Churn ties directly to LTV and retention
| Formula | Calculation | Relationship |
|---|---|---|
| Customer Lifetime Value | AOV × Frequency × (1 ÷ Churn) | Churn sets lifespan; LTV = AOV × Freq × Lifespan |
| Retention Rate | 100% - Churn Rate | Inverse of churn |
| Customer Lifespan | 1 ÷ Churn Rate | Average tenure; use same period as churn |
| LTV:CAC | LTV ÷ CAC | Churn affects LTV and thus LTV:CAC |
| Cohort Retention | % of cohort still active each period | Cohort view of churn over time |
Frequently Asked Questions
Common questions about churn rate
Customer churn rate = (Customers Lost in Period ÷ Customers at Start of Period) × 100. For example, 80 customers at start of month, 12 left: (12 ÷ 80) × 100 = 15% monthly churn. Revenue churn uses (Revenue Lost ÷ Revenue at Start) × 100.
Customer churn counts how many customers left. Revenue churn measures revenue lost from those customers (or from downgrades). You can have low customer churn but high revenue churn if your biggest spenders leave. Track both for subscriptions and high-value segments.
Ecommerce often uses 'inactive' or 'lapsed' instead of formal churn. Define a window (e.g. 12 months with no purchase). Churn = (Customers who became inactive in period ÷ Active at start) × 100. Or use cohort retention and infer churn from 1 - retention.
Customer Lifespan = 1 ÷ Churn Rate (use decimal: 15% = 0.15). So 15% annual churn → lifespan = 1 ÷ 0.15 = 6.67 years. LTV = AOV × Frequency × Lifespan, so churn directly affects LTV. Lower churn means longer lifespan and higher LTV.
It depends on business type. Subscription SaaS: 3–8% monthly is common; under 5% is strong. Ecommerce: often measured as % of customers who don't repurchase within 12 months; 60–80% 'lapse' in a year is typical. Compare to your own history and segment.
Use the period that matches your billing or purchase cycle. Monthly churn is common for subscriptions. For annual contracts use annual churn. Convert: Annual Churn ≈ 1 - (1 - Monthly Churn)^12. A 5% monthly churn is about 46% annual.
See Who's at Risk of Churning
StoreRadar helps you understand retention and LTV by segment so you can reduce churn and grow lifetime value.
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