Net Dollar Churn is How You Grow Your Business; Gross Customer Churn is How You Lose Your Business

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medium.comSaaS businesses are unique in that you spend upfront to acquire a customer who will become profitable over time. Therefore retention (or its inverse, churn) of customers is an important metric to track. While there are several ways to calculate churn, the two churn metrics to focus on are net dollar churn (how you grow your business) and gross customer churn (how you lose your business).

Net Dollar Churn is How You Grow Your Business

Net Dollar Churn = [$ Revenue Lost from Cancelled Customers] + [$ Revenue Lost from Customers Spending Less] — [$ Revenue Gained from Customers Spending More]

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photo CC by Rudolf Getel

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