Monthly Churn Rate

What’s Monthly Churn Rate?

Remember playing with water in a bucket that had a small hole? Monthly Churn Rate (MCR) is like measuring how much water you’re losing each month. But instead of water, we’re talking about customers who wave goodbye to your product.

The Formula for Monthly Churn Rate

Here’s how to calculate it:

Monthly Churn Rate = (Customers who left this month ÷ Total customers at start of month) × 100

Let’s make it super real:

• You start January with 200 customers
• 10 customers leave during January

MCR = (10 ÷ 200) × 100 = 5%

Translation: You’re losing 5% of your customers every month. Ouch!

What’s a “Good” Churn Rate?

For SaaS startups:

• Amazing: Less than 2% monthly
• Pretty Good: 2-5% monthly
• Uh-oh Territory: 5-8% monthly
• Red Alert: More than 8% monthly

But remember: These numbers are like shoe sizes – what’s good depends on your business type and who your customers are.

Why Should You Care?

Let’s play a quick game called “The Disappearing Customers”:

• Start with 1,000 customers and 5% monthly churn:

• Month 1: 950 customers left
• Month 6: 735 customers left
• Month 12: 540 customers left

Plot twist: You lost almost half your customers in a year! This is why investors get sweaty when they see high churn rates.

The Netflix Example

Netflix is like the anti-churn champion. Their monthly churn is around 2-3%. Why?

• People love the product
• It’s part of their daily routine
• Constant new content
• Easy to use

Meanwhile, many meal kit services see 10-15% monthly churn because:

• People get bored
• It’s expensive
• Life gets busy
• Lots of competition

Churn Rate Horror Stories

The “It’s Just a Small Leak” Trap

Startup founder: “We only lose 8% of customers monthly, no biggie!”

Math: That’s 63% of your customers gone in a year. Big yikes!

The “Growth Will Fix It” Myth

You: “We’re losing 100 customers monthly but gaining 120!”

Reality: You’re running on a treadmill. Exhausting and expensive.

How to Not Suck at Churn

Watch for Warning Signs

• Customers using your product less
• More support tickets
• Fewer feature uses
• Payment failures

Think of these as the “check engine” light for your startup.

Real Talk About Fixing Churn

Do:

• Talk to leaving customers (yes, actually talk to them)
• Make onboarding stupid-simple
• Solve problems before customers notice
• Keep adding valuable features

Don’t:

• Hide the cancel button
• Ignore customer complaints
• Assume customers will figure it out
• Blame it all on price

The Bottom Line

Monthly churn is like a health check for your startup. High churn = sick business. Low churn = healthy business.