Churn
Churn is the loss of a customer or of their revenue, and it must be measured with a stated basis, logo or revenue, and a stated recognition point.
Logo churn and revenue churn diverge sharply in any business with a wide contract-value distribution: losing many small accounts and losing one large one are the same revenue event and completely different logo events. Reporting only one hides the shape of the problem.
The recognition point matters as much as the basis. Churn can be recognized at notice, at contract end, or at final service date. Each produces a different period assignment, and mixing them across teams is why customer success and finance rarely agree on last quarter’s churn.
Where it breaks
Churn is recognized at notice by CS and at term end by finance, so quarterly numbers never match.
Related terms
- Gross revenue retention (GRR)
- GRR measures how much starting recurring contracted value remains after churn and contraction, before expansion; under that definition it is capped at 100%.
- Net revenue retention (NRR)
- NRR is ending recurring contracted value for a starting cohort divided by that cohort’s starting recurring contracted value, after churn, contraction, and expansion and excluding new customers.
- Customer health score
- A health score is a predictive model of renewal likelihood built from observed signals, and it is only a model if it has been validated against actual renewal outcomes.
- Renewal management
- Renewal management is the governed process by which a contract term ends and a new one begins, with the renewal treated as a forecastable pipeline event.
Field notes on this
- Read NRR with GRR
NRR can combine base retention with concentrated expansion. Pair it with GRR and a cohort bridge, then investigate the causes separately.