Calculate customer churn, revenue churn, annualized rates, and implied customer lifetime. Benchmark against SaaS industry standards.
| Segment | Monthly Churn | Annual Churn | Implied LT |
|---|---|---|---|
| SMB (<$10K ACV) | 3-7% | 30-60% | 14-33 mo |
| Mid-Market ($10K-$100K) | 1-2% | 12-24% | 50-100 mo |
| Enterprise (>$100K ACV) | 0.5-1% | 5-10% | 100-200 mo |
| Best-in-Class (Any) | <0.5% | <5% | 200+ mo |
Why segment matters: SMB SaaS inherently has higher churn because smaller companies go out of business, have budget constraints, and switch tools more freely. Enterprise churn is lower because switching costs are high, procurement cycles are long, and contracts are longer. You cannot compare churn rates across segments — compare within your ACV tier.
These two metrics often diverge, and the divergence tells you something important.
It depends heavily on your customer segment (SMB vs enterprise) and ACV. SMB SaaS: 3-7% monthly is typical, under 3% is good. Enterprise: under 1% monthly is good, under 0.5% is great. Annual dollar churn under 10% is considered strong across all segments. Best-in-class companies (Slack, Salesforce) have annual revenue churn under 5%.
Annualized churn is NOT simply monthly churn × 12. The correct formula accounts for compounding: Annual Churn = 1 - (1 - Monthly Churn)^12. For example, 3% monthly churn = 1-(1-0.03)^12 = 30.6% annual, not 36%. This matters when comparing across periods or presenting to investors.
Negative revenue churn occurs when expansion MRR (upsells + seat adds + upgrades) from existing customers exceeds churned MRR. Net revenue churn = (Churned MRR - Expansion MRR) / Beginning MRR. If this is negative, your existing customer base grows without any new customer acquisition. Snowflake, Datadog, and Twilio have maintained 130-160% Net Revenue Retention for years.
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