Calculating Churn Rate

To proactively measure and manage logo churn, businesses have each developed their own terminology, approaches, and measurements to calculating churn rate.

5 critical metrics for Calculating Churn Rate:

• Customer Success Magic Number
  [ARR/MRR of customers renewed in period + ARR/MRR of up-sells in period] / [Total cost of Customer Success team + Customer Support team]
• Customer Success Batting Average
  [# of customers renewed in period] / [# of customers eligible for renewal in period]
• Customer Success Headwind
  [ARR/MRR* of churned customers and ARR/MRR decreases] / [Beginning of period ARR/MRR]
• Customer Success Tailwind
  [ARR/MRR of up-sell and price increases] / [Beginning of period ARR/MRR]
• Net Revenue Retention Calculation
  [Beginning of period ARR/MRR + ARR/MRR of up-sell and price increases – ARR/MRR of churn and price decreases] / [Beginning of period ARR/MRR]

Learn more about Calculating Churn Rate:

• Gainsight’s Executive Guide to Churn eBook
• Gainsight Glossary – Annual Churn Rate
• Gainsight Glossary – Calculating Customer Churn Rate
• Predicting Customer Churn with Gainsight