Churn rate refers to the number of customers that stop using or purchasing your product or service every month. Regardless of the quality of your product or service, every company will lose customers every month and experience churn. In the world of SaaS, this is often focused on how many customers did not renew subscriptions that month.
You want to know this number to understand how effective your service is, and how satisfied your customers are. After all, it is always easier to retain customers and upsell to them or have a constant revenue than it is to find new ones. If you don't know your churn rate, you have no way to tell how your customers perceive you.
To calculate your churn rate
over a specific period of time, you can use the following formula:
(# Customers at Start of Period - # Customers at End of Period / Total Customers at Start of Period) x 100 = Churn Rate
What you want is a low churn rate, also known as attrition rate, compared to your growth rate. After all, the lower your churn rate is, the more customers you have retained.