Also called attrition rate, cancellation rate
Churn rate is the share of subscribers or customers who cancel during a period, and it compounds — small monthly numbers become large annual ones.
The arithmetic is what makes churn dangerous. Five percent a month is not five percent a year; it is roughly forty-six percent, because each month's loss applies to what remains. A business losing half its customers annually has to replace half its customers annually before it grows at all.
Voluntary and involuntary churn need separating. People who decide to leave are a product problem; people who leave because a card expired are a billing problem, and the second is usually cheaper to fix than anyone expects.
Early churn and late churn also differ. Cancelling in month one usually means the promise and the product did not match; cancelling in month fourteen usually means the need ended.
In practice
400 subscribers at 5% monthly churn means finding 240 replacements a year just to stand still.
Common mistake
Chasing new subscribers while ignoring churn. Above a certain rate, acquisition cannot outrun the leak at any budget.
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