What is Customer Churn Rate (Logo / Account churn)?
Customer churn rate (logo churn) is the percentage of starting customer accounts that cancel or fail to renew during a defined period (month/quarter/year), ignoring how much they paid.
It matters because logo losses shrink the renewable revenue base, reduce LTV, raise required new bookings just to “stand still,” and weaken unit economics and value creation (ARR/MRR durability, Rule of 40, and capital efficiency).
Formula
Example
Starting customers (beginning of month): 1,000
Customers lost (churned) during month: 30
Customers retained: 970
Frequently Asked Questions
What’s the correct denominator for logo (customer) churn — starting customers or ending customers?
Use starting customers for the selected period. Logo churn is meant to measure how much of your beginning customer base you lost, not how many you ended with.
Should I include new customers gained during the period when calculating customer churn?
For true logo churn, don’t include new customers—new logos are a separate growth motion. Only include new customers if you’re intentionally trying to normalize churn against a changing customer base, and then keep that method consistent over time.
How do I compare monthly churn to quarterly or annual churn without misleading myself?
Convert using compounding, not simple division. If your churn is measured over N months, monthly-equivalent churn is:
- Monthly-equivalent churn (from churn over an N-month period):
_(read as: “one minus (one minus period churn) to the power of one over N”)_
- Annual churn (from monthly churn):
When is logo churn the wrong metric, and I should use Net MRR Churn / NRR instead?
Use Net MRR Churn (or NRR) when expansions, downgrades, and account size differences matter—logo churn can look “fine” while revenue retention is slipping (or vice versa).
Sources & Methodology