What it is
Churn, specifically customer churn or customer attrition, is a metric that measures the rate at which customers discontinue their relationship with a company, cancel subscriptions, or stop using a service over a specified period. It is typically expressed as a percentage. For subscription businesses, churn can also refer to revenue churn, which measures the lost revenue from existing customers due to cancellations or downgrades, rather than just the number of customers.
High churn rates are a significant concern for investors, as they indicate customer dissatisfaction, competitive pressure, or a weak product-market fit, requiring companies to spend more on acquiring new customers. Conversely, low churn rates signal strong customer loyalty and product value, contributing to more predictable and sustainable revenue growth. Companies often highlight efforts to reduce churn in earnings calls and investor presentations, as it directly impacts profitability and valuation, especially in recurring revenue models.
Why it matters
High churn signals customer dissatisfaction and lost revenue, forcing companies to spend more on new customers. Low churn indicates strong customer loyalty and sustainable growth.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice