Churn rate explained: customer churn vs revenue churn
18 Oct 2026 · 2 min read · By the Knock team
Key takeaways
- Customer churn counts lost accounts; revenue churn counts lost money.
- Revenue churn can be negative if expansion outweighs losses.
- Separate voluntary churn (cancelled) from involuntary churn (failed payments).
Churn is the rate at which customers or revenue leave over a period. It is the single number that most limits how large a subscription business can grow.
Customer churn
Customer churn rate = customers lost during the period / customers at the start of the period. If you start March with 200 customers and lose 6, your monthly churn is 3%.
Revenue churn
Revenue churn rate = MRR lost to cancellations and downgrades / MRR at the start of the period. It weights large accounts more heavily, which is usually closer to reality.
Net revenue retention
Net revenue retention (NRR) adds expansion back: (starting MRR + expansion - contraction - churn) / starting MRR. Above 100% means existing customers grow faster than they leave.
Voluntary vs involuntary churn
Voluntary churn happens when a customer decides to leave. Involuntary churn happens when a card fails or a mandate lapses and nobody follows up. Involuntary churn is often the cheapest to fix, with retries, reminders and a clear payment link.
What is a good number?
It depends on customer size and contract length. Small self-serve products naturally see higher monthly churn than enterprise contracts. Compare against your own trend and your own segments before comparing to anyone else.
- Measure churn monthly and by cohort.
- Tag every cancellation with a reason.
- Review failed payments weekly.
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