Churn MRR is MRR lost from customers that completely cancelled their subscription. Unlike Churn Rate, which measures the proportion of customers lost, this metric focuses on the financial impact of customer churn. It's an essential metric for subscription-based businesses, as it directly affects the company's revenue and growth projections.
This metric is useful for understanding the rate customers cancel subscriptions. It's normal for Churn MRR to grow over time as MRR increases, but it should not outpace the rate of growth in MRR.
Average Churn MRR x # Churned Customers
To calculate Churn MRR, multiply the average Churn MRR by the number of churned customers.
Three leading causes of churn together account for >50% of SaaS churn on average: poor onboarding, weak customer relationship building, and poor customer service. Be proactive with communication and education around your product. Invest in offering effective customer support to address issues and provide excellent customer service. If a customer churns, make an effort to deeply understand why they churned. Generally, spending resources on retaining current customers has a higher ROI than spending resources on acquiring new ones.
Don't underestimate the compounding nature of Churn. It not only affects current revenue but also eliminates future opportunities to upsell or cross-sell to those customers. Churn represents not only the loss of a single transaction but the remainder of a customer's LTV.